NIPS COLLEGE OF IT AND MANAGEMENT ALLAHABAD

A MARKETING PROJECT REPORT ON NESTLE VS CADBURY Submitted Submitted by to

Mr. JITENDRA ANIL MOHIT BBA 6TH Sem

KESWANI

R oll No.9206490005

DECLARATION

I ANIL MOHIT a student of NIPS COLLEGE OF IT & MANAGEMENT ALLAHABAD BBA6THsemester, hereby declares that the final year research report entitled A MARKETING PROJECT REPORT ON NESTLE VS CADBURY is my original work and the same has not been submitted for the award of any other diploma or degree.

(ANIL MOHIT) BBA 6TH SEMESTER

Roll No 9206490005

ACKNOWLEDGEMENT

I take this opportunity project to place on record my grateful thanks and sincere gratitude to all those who gave valuable advice and inputs for my study. My study could not have been completed if I had not been able to get the reference materials from the company.

I am immensely grateful to my esteemed guide Mr. JITENDRA KESWANI whose continued and invaluable

guidance can never be forgotten by me but without whom this study could not have got present shape.

The success of this report is because of the cooperation of all. I take no credit for this achievement but take responsibility for any mistakes and inaccuracies & finally as well I want thanks to GOD, for being so kind to me and blessing me with you all.

(A NIL MOHIT) B BA 6TH SEMESTER R oll No 9206490005

TABLES OF CONTENT
THE INDUSTRY SCENARIO-----------------------------------------------------------------------------------------78 RESEARCH METHODOLOGY-------------------------------------------------------------------911
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OBJECTIVES OF STUDY----------------------------------------------------------------------12

THE

CADBURY DAIRY MILK------------------------------------------------------------------------13-20 A. HISTORICAL HIGHLIGHTS B. PRODUCTION C. V I S I O N D. ADVERTISING & SALES PROMOTION E. DISTRIBUTION SYSTEM ADOPTED BY CADBURY NESTLE INDIA LIMITED-----------------------------------------------------------------------21-24 A. HISTORICAL HIGHLIGHTS B. MORE THAN A MOUTHFUL - CHOCOLATE INDUSTRY GROWING MARKETS MARGINS--------------------------------------24-28 A. Direct Competition B. INDIRECT COMPETITION C. MARKET RESEARCH OBSERVATION & FINDING------------------------------------------------------------------------------------------------------------------29-30 Data analysis & Interpretation-------------------------------------------------------------31-43 Strategies of the Dominant Brands---------------------------------------------------44-51 ............FALLING

A. Personality Traits
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B. Impulsive Buying Behavior and Pricing C. RECOMMENDED MARKETING STRATEGY DESIGN D. Market Segmentation and Target Market Selection E. TARGET AUDIENCE SUGGESTIVE MARKETING PRODUCT-----------51-64 MIX FOR INTRODUCING A NEW

A. Product B. Pricing C. Promotion D. Positioning E. Advertisement Plan F. Advertisement Objectives G. Sales promotion Activities H. Market Testing Plan IMPLEMENTATION----------------------------------------------------------------------------------------------------65 CONCLUSION---------------------------------------------------------------------------------------66 ANNEXURE -------------------------------------------------------------------------------------67-74 BIBLIOGRAPHY-------------------------------------------------------------------------------------75

A MARKETING PROJECT REPORT ON NESTLE VS CADBURY

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THE INDUSTRY SCENARIO

With the entry of multinationals and home companies sprucing up their act, t h e c o n f e c t i o n e r y mar k e t i s b o o mi n g . Mc Ki n s e y & Co. h as es t i ma t e d the confectionery industry to touch a whopping Rs. 6500 crore by the year 2008. Till the eighties, the chocolate market was small and the product category i t s e l f was f u z z y . In t he e i g h t i e s , C ad b u r y s - t h e v i r t u al mo n o p o l i s t - h ad decided to focus its efforts on making chocolates a distinct category with an i de n t i t y o f i t s o wn . An d t he mar k e t e r h ad s h ar p l y po s i t i o n e d i t s pr o d u c t at children to do that. Hence, chocolates bore an Only for kids tag, and kept adults at bay. By the end of the eighties, Cadburys still ruled the roost with over 80 percent market share. And though several brands - like Amul and Camp co - tried to break into the market, none of them had succeeded in shaking the leaders grip. In fact, Cadburys had become a brand virtually generic to chocolates. Then chocolates were used to reward and reinforce positive behavior and hence were categorized as a luxury reserved for special occasions. This was, a stark contrast to the west where chocolates were snacked on, eaten as mini meals or just to suppress pangs of hunger. But constant working by players like Cadburys (re-launch of Cadburys Dairy Mi l k t ar g e t i n g ad u l t s an d as a c as u a l an y - t i me b u y ) an d Nes t l e t o war d s exploding the myth that chocolates are meant for children only, has resulted inthe segment booming.

Trends in the Industry

Wi t h s o c i o - e c o n o mi c c h a n g e s r ap i d l y t ak i n g pl ac e , t he yo u n g an d n o t s o young population will lead a new life style and chocolate eating is definitely going to be widespread and acceptable. In the industry, both population and family incomes as well as urbanization are on the increase. T h er e h as b e e n a s i g n i f i c an t g r o wt h i n t he mi d d l e c l as s , wi t h 5 . 8 mi l l i o n people having upgraded to the quoted middle class. There is quantified data on FMCG usage having increased (NRSVI & IRS98figures) Thanks to the above reasons the growth in the chocolate market is estimated t o b e at 22% in 2001. But marketers in the industry are looking forward to a much higher growth rate, as Indias per capita consumption of chocolates is only 15 Gms. Versus 6 Kg in the west

The Indian Chocolate market can be sliced into four parts.

1. Moulded Chocolate Segment Comprising slab chocolates like Dairy milk chocolates, etc. These are made by pouring the ingredients into moulds. 2. Countline Segment Comprising bars like 5 star, Bar One, Perk, Kit Kat, etc. These have ingredients other then chocolate and are usually Bar shaped, making for chunky bites.
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3. C h o c o - P a n n e d S e g m e n t C o mp r i s i n g c h o c o l a t e f o r ms l i k e Butterscotch, Nutties, Tiffins, etc. Panned variety has different cores/centers which are covered with a layer of chocolate. 4. Sugar-Panned Segment Comprising chocolate forms such as Gems, Chocolate clairs, etc. These generally have a sugar coating on the outside.

RESEARCH METHODOLO GY
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RESEARCH METHODOLOGY
As mentioned earlier, the objective of the study is to formulate a Marketing S t r a t e g y f o r a n y n e w e n t r a n t in the Indian Chocolate Industry. While recommending the said strategy detailed information from both primary and secondary sources was collected and analyzed. This included: Primary Sources Four level primary information collections were undertaken. 1 . T o an a l y z e bu y i n g be h av i o r an d i n o r d e r t o g ai n an i ns i g h t i n t o t he bu y e r n e e d - s at i s f ac t i o n l ev e l , a q u e s t i o n n ai r e was fo r mu l a t e d an d administered among 80 people. The profile of the respondents was as follows: 1. Consumers of chocolates 12 years + in LUDHIANA. This was since; chocolate consumption was witnessed amongst all age groups. 2 . A di s t r i b u t o r was al s o i n t er v i e we d s o as t o ge t p er t i n e n t i n fo r ma t i o n regarding the most important P of FMCG marketing Place. 3. Extensive interviews were conducted with retailers in the LUDHIANA a r e a . T h e s e i n c l u d e d p a n s h o p s , g r o c e r y s h o p s , b a k e r i e s , departmental stores, etc. They provided information on various facts of chocolate
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distribution such as Point-of purchase material (dispensers et c . ) , i nf r as t r u c t u r e p r o b l e ms , c r i t i c al i nf o r mat i o n al r eg ar d i n g t he policies of the present players in the market, etc. Secondary Sources A number of secondary sources of information were used. These were: Information: Industry statistics, problems facing the industry, future outlook, etc. Also measures being adopted for cocoa production development. Internet websites Of Cadburys, Nestle and indiainfoline.com, askjeeves.com Extensive use of secondary information in the form of magazines/journals/newspapers clippings, such as Business World, Business Today, Business India, A&M, Brand Equity, Economic Times, etc. The methodology adopted was as follows: Industry Scenario Sketch (utilizing secondary information) Extensive Interviews held with Primary/Secondary (Companies/Chocolate manufacturers Association). Extensive retailer interviews in LUDHIANA Area Formulation and administration of a questionnaire Formulation of the Recommended Strategy on the basis of the abovementioned Primary and Secondary Information Sources

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OBJECTIVES OF THE STUDY

1. To get familiar with their marketing strategies separately.
2.

To view the segments being targeted by these brands in the market.

3. Up to what extent do the public respond to their products?

4.

To prepare a marketing plan for any brand that is planning to enter the India chocolate market.

5. To be a relevant guide for any brand launch in India.

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COMPANY PROFILE

History
Started business in 1948 in India. The company was incorporated as Cadbury-Fry (India) Pvt. Ltd. Founder: John Cadbury in Birmingham, UK in 1824
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Current MD: Mr. Rajiv Bakshi Turnover: 450 Cr. No. of offices: 4 Staff Strength 2000 approx. 1. Branch Manager is responsible for the entire Branch Function 2. Promotional Materials Network ad, Media, P O S M a t e r i a l s l i k e posters, danglers, dispensers etc. 3 . T ar g e t A l l ag e gr o u p s 4. Distribution: Through C&F Agents Re-distributors Retailers consumers Godown: 1 in Delhi Office: 1 in DelhiAvg. No. of calls per day by S.O.: 35Sales Reporting weekly basis 5. Sales Kit: Daily call report, product folder, price list, calculator, etc. 6 . Or g a n i s a t i o n a l St r u c t u r e : 7. Key products: Cadburys Dairy Milk, 5 Star, Fruit & Nut, Bourn vita, Perk etc.

COMPANY BACKGROUND
In 1930 R Hudson and Company finally joined with Cadbury. This gave the f l o u r i s h i n g l o c al f i r m a d i r e c t l i n k wi t h o ne of the gr e at e s t in i n t e r n a t i o n al chocolate manufacturing and marketing. Over the years the company has been involved with many other long standing brands and entrepreneurs names such as Fry a chocolate brand dating back to 1756, and of course Schweppes which is still part of the Cadbury group internationally although no tin New Zealand.
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In 1969 Cadbury Fry and Schweppes merged internationally with the New Zealand Company becoming known as Cadbury Schweppes Hudson Limited in 1973. In 1 9 86 C ad b u r y Sc h w e p p e s Hu d s o n me r g e d wi t h C ad b u r y S c h we p p e s Australia. The result was a truly international operation with both the New Zealand and Australian companies supplying each other. Cadbury Schweppes Australia is a fully owned subsidiary of Cadbury Schweppes plc, the United Kingdom based parent company. Most recently, in 1990 Cadbury required the Griffins confectionery business, and sold the Hudson biscuit operation in a reciprocal agreement. The Griffins b u s i n e s s d a t e s b a c k t o b e f o r e the turn of the century. G e o r g e G r i f f i n established the company when he opened a small confectionery business at Nelson. Finally, in 1991 we became known as Cadbury Confectionery Ltd, and can now boast dominance in New Zealands chocolate and sugar confectionery markets. With manufacturing bases in both Dunedin and Auckland, as well as sales offices in Wellington and Christchurch, the Company employs nearly1,000 in total. The Cadbury group has also flourished internationally. Cadbury Schweppes the parent company has manufacturing facilities in 20 countries and its famous brands are bought and enjoyed in more than 110 countries around the world. Cadbury is one of the worlds leading chocolate makers and is number one in England and Australia as well as in New Zealand.

PRODUCTION
Cadbury Indias first manufacturing facility was set up at Thane (Mumbai) in1966. Today, the factory has grown manifold and manufactures a range of p r o d u c t s t h a t include Cadbury Dairy Milk, 5 Star, Nutties,
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G e m s a n d Bourn vita. The factory employs about 750 people and houses the R&D and engineering development facilities of the company. In a move towards backward integration, Cadbury bought Induri Diary farm in P u n e i n 1 9 6 4 . R e c e n t l y , a m a j o r i n v e s t m e n t p r o g r a m r e s u l t e d i n t h e installation of modern molding, crumb and chocolate making facilities. Today, the Induri Factory manufactures intermediate products like milk crumb and arrange finished chocolates. In 1989, the company began operations in their newest and most modern plant at malanpur. Equipped with state-of-theart technology and backed by constant investment, this unit manufactures clairs, Gems, Perk and Picnic.

VISION
The governing objective for Cadbury India is to deliver: Superior Shareholder Value Cadbury in every pocket

ADVERTISING & SALES PROMOTION

As we have discussed the importance of Advertising and Sales promotion in i nt r o d u c t i o n , s o we k no w ho w mu c h ad v e r t i s i n g ai m s al e s p r o mo t i o n ar e important. The slogans of advertising are the tools of sales promotion are so important which couples the customer to purchase the product. Now we are going to discuss all these things one by one about Cadbury.
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Following are a few advertising slogans used by Cadbury for introducing the product to the customers:THE THODI (PERK) WHEN (PERK) TAN KUCH (PICNIC) KI SI REAL PET EVER SHAKTI, ZADA POOJA ON TASTE KABHI OF (DAIRY MILK) BHI KAHI LIFE BHI STRIKE SHAKTI SOLID

HUNGER MAN KI (BOURNVITA) HI

YEH CHOCOLATE KHAE AAP INHE KHAE (ECLAIRS) All these slogans used by Cadbury are beautifully prepared because they can compel the consumer to buy the product to some extent. No w we wi l l d i s c u s s t he m i n d et ai l s wi t h t h e he l p o f wh i c h we c an e as i l y understand how these slogans can leave these impression on the customer. The Real Taste of Life This slogan was prepared for the first chocolate introduce by the Cadbury first time in India. The chocolate was Dairy Milk. This slogan says that there are many types of products present in the market, they have different taste but Dairy Milk is the best and the true taste of the life. This slogan also stands for the victory. On electronic media, the advertisement shows that a cricketer wins the match and after that he and his girl friend eats this product. Therefore, this stands for victory of any body eats this product will definitely win in his life.
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Thodi Si Pet Pooja Kabhi Bhi Kahi Bhi When Cadbury introduced its next chocolate named Perk this slogan were used. This explains that if anybody is hungry and he do not have any thing to eat accept this Perk then he can have this. This shows that Perk is so good chocolate which can be used as a substitute of food and is a complete food. Whenever on Hunger Strike Later on Cadbury came out with new slogan on television; the advertisement shows that few students are on hunger strike. But they had the chocolate. This shows that nobody can control himself/herself if this product of Cadbury is lying in front of that person. This means that Cadbury product is so good that nobody can leave it.

Tan Ki Shakti, Man Ki Shakti This slogan was used for Bourn vita. Bourn vita is full of proteins, vitamins, minerals and all those necessary things which are useful for our body and mind. Therefore, this slogan stood best for Bourn vita. TAN KI SHAKTI, means the energy to the body. If anybody here this product, he /she will remain active for whole day. That person will look healthy, active and will look smart. YEH CHOCOLATE KHAIN, AAP INHE KHAIN When clairs toffee came in the market, this slogan was used. clairs is a toffee filled with chocolate. It means that instead of having chocolate you can h a v e c l a i r s t o f f e e too. It a person does not want to have 12 pieces o f chocolate, can have one or two clairs toffee. KUCH ZADA HI SOLID No w ad a y s n e w c ho c o l at e h as be e n i n t r o d u c e d b y t he C ad b u r y an d t hi s slogans going on creating demand for this
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new product. In this ad we can see that one chocolate falls on a car and damages the car. This chocolate is so strong due to lots of nuts, caramel etc. etc. present in this chocolate. This also shows that this is for adventurous people who love thrills, adventure etc.

DISTRIBUTION SYSTEM ADOPTED BY CADBURY

Cadbury Schweppes pick the world number 3 soda market has egged to sell most of its soft drinks business outside the US to Coca Co. for $ 1.85 billions to finance a head on battle with Coke in the No. 1 soda makers home market. The agreements included the Showers Dr. Pepper chanda dry and crush brands and exude South Africa and France the pact which was dependent on regulatory approval was likely to be concealed in mid 1999 Cadbury said. The more will allow Cadbury to expand it Dr. Peeper business in US where it derives two-thirds of its soft drinks sales and was a 15 per cent market share at the same time it get Cadbury out of markets where it is growing at a slower pace. The shares rose as much as 70.5 per cent or 7.5 per cent or 7.5 per cent 1002.This sort out the places where Cadburys systems werent strong enough to c o m p e t e with Coca- Cola, said Mr. David long an analyst a H e n d e r s o n Crosthwaite, they were fighting with proper for this.

Patterns of distribution channels a n d t y p e s o f d i s t r i b u t i o n intermediaries

Manufacture Stockiest/Distributor Semi-wholesaler

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 Retailer User

FACTORS INFLUENCING PRICING OF CADBURY

Internal Factors Corporate and marketing objectives of the firm. The image sought by the firm through pricing. The characteristics of the product. Price elasticity of demand of the product. The stage of the product on the product life cycle. Use pattern and turn around rate of the product. Cost of manufacturing and marketing. Extent of distinctiveness of the product and extent of production differentiation practiced by the firm. Ot h e r el e me n t s o f t he mar k e t i n g mi x o f t h e fi r m an d t he i r i nt er ac t i o n wi t h pricing. Composition of the product line of the firm.

External Factors Market characteristics. Buyers behavior in respect of the given product. Bargaining power of major customers. Competitors pricing policy. Government controls regulations on pricing. Other relevant legal aspects. Societal (or social) considerations. Understanding, if any reached with price cartels.

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Cadbury objective of pricing

Profit maximization in the short-term. Profit optimization in the long-term. A minimum return (or target return) on investment. A minimum return on sales turnover. Targets sales volume. Target market share. Deeper penetration of the market. Entering new markets. Target profit on the entire product line irrespective of profit level in individualproducts. Keeping competition out, or keeping it under check. Fast turn around and early cash recovery. Stabilizing prices and margins in the market.

NESTLE INDIA LIMITED

HISTORICAL HIGHLIGHTS
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Incorporated in 1959 as Food specialties, Nest India (NIL) was promoted by Nestle Alimantana, Switzerland, which presently holds 51% equity stake in the company. Manufacturing in India began with the start up of the Moga Factory in 1962. Nestls first unit at Moga, Punjab is manufacturing: Milk products Infant milk formulae Weaning cereals Culinary products Beverages It is the main manufacturing unit of Nestle India Limited. The second factory at Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea wasset up in 1967. The third plant in Nanjangud, Karnataka was set up in 1989 to produce Instant Coffee Health Beverages The fourth plant at Samalkha, Haryana, was set u in 1993, to produce Weaning cereals Culinary products Health beverages Milk products The fifth plant at Ponda, Goa was set up in 1994 to produce: Wafers Waffles

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The sixth plant at Bicholine, Goa commenced construction for manufacture of a range of culinary products and this was expected to be commissioned in the latter part of 1996. Nestle India, the largest food company in the country is continuously looking at new niches in the market place for its various products. In mi l k pr o d u c t s Ne s t l e h as ma d e a c o n s i d e r ab l e mar k . Fo r i ns t an c e , t h e c o m p a n y was the first to introduce a Dairy Whitener with its product Everyday'. And till today that product is a brand leader despite the presence of a host of other brands in the field. IN the case of Milkmaid condensed milk, Nestle relaunched the product as desert maker and has seen the sales graph climbing since. In baby foods, Nestle has made its strong hold with Lactogen and Cerelac. Ne s t l e i s al s o po p u l ar i n p ur e g h e e s e g me n t . It s Ev e r y d a y pu r e g h e e h as gained a quite satisfactory market share, Nestle has also entered into fitness f o o d p r o d u c t s . N e s t l e t o d a y i s a h o u s e h o l d n a m e . N e s t l e e x t e n d e d t h e product line in coffee by bringing in Dolco, and then Sunrise. In 1990, NI L en t er e d the c ho c o l at e business i nt r o d u c i n g Ne s t l e Pr e mi u m chocolate. Nestls products are sold under brand names such as a Milkmaid, Everyday, Cerelac, Nescafe, Maggi, Lactogen, clairs etc. It launched the world famous Kitkat chocolates in 1995. During the year 1996 Milo the worlds largest selling chocolate energy food drink was launched.

MORE THAN A MOUTHFUL - CHOCOLATE INDUSTRY

The Indian chocolate market is getting bigger and better. While on one hand, the premium segment (comprising imported varieties) is opening up, on the other, companies like Cadbury India are launching indigenous products made to international standards. Of the 20,000-tonne chocolates market worth about
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Rs. 400 crores, Cadbury accounts for about 70 percent, followed by Nestle, with a share of around 20 percent. Amul has five per cent of the market, with minor players taking the rest. The battle, though, is between Cadbury and Nestle. Though much smaller portfolios, Nestle is putting up a touch fight. 5 Star Although positioned internationally as energy bar, 5 Star was positioned on an emotional platform in India during the late 1980s. Symbolizing togetherness, 5S t a r w a s o r i g i n a l l y targeted at teenagers. In June 1994, the company reworked the strategy for 5 Star to make it a source of energy. In fact, before t h e l a u n c h o f P e r k , 5 S t a r ' s e n e r g y b a r p o s i t i o n i n g m a d e i t a s n a c k i n g chocolate, with Nestle pitching Bar One (launched in 1993) against it with the pu n c h l i n e 'f o r t ho s e i n b et we e n t i me s ' . C ad b u r y wi l l be l au n c h i n g a ne w campaign for 5 Star shortly. They would like to further 5 Star's equity in the functional or snacking direction. It is very nebulous one though. Eclairs Competing in the chewable toffees segment, Eclairs was relaunched during t he mi d - n i n e t i e s wi t h a n e w n ame , Dai r y Mi l k Ec l ai r s . Ac c o r d i n g t o Raj i v Bak s h i , Ma n a g i n g Di r e c t o r ( d es i g n a t e ) , C ad b u r y In d i a Lt d , gr o wt h i n t hi s segment is very high. It is worth over 4000 tones n o w . N e s t l e a l s o a presence here with Nestle's Eclairs. Gems Broadcasting Gems, though, did not prove to be a feasible proposition for C a d b u r y . Targeted at children u n d e r 1 2 y e a r s w i t h t h e ' G e m s B o n d advertising, Cadbury decided to woo teenagers with the 'Smart'. Very smart campaign. But now, the company is re-targeting children with its animated commercial. Gems is the best brand to speak to children. Colorful chocolate buttons appeal
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most to children and that is why we are re-targeting children. While Cadbury has successfully relaunched a host of its subbrand, it has not been able to pay attention to brands like Mr. Pops lillipop. As you grow and add more brands, the ability to spend on brands becomes lower. Therefore we have selected a few critical brands to do a paper job. POLO POLO is one of Nestle's key strategic confectionery brands worldwide, and r ep r e s e n t s Ne s t l e ' s f i r s t e nt r y i nt o t he l ar g e 5 0 , 0 0 0 t o n n e p . a. ( o r g a n i z e d sector) Indian Sugar confectionery market

GROWING MARKETS ............FALLING MARGINS

In c o r p o r at e d i n 1 9 5 9 as Fo o d S p e c i al t i e s Lt d . , Ne s t l e In d i a Lt d . ( NIL ) i s p r o mo t e d b y Ne s t l e Al i me n t a n aS wi t z e r l an d , wh i c h p r e s e n t l y o wn s 51 % eq u i t y s t ak e i n i t . Ni l i s o n e o f t h e t o p pl a y e r s i n t h e p r o c e s s e d fo o d an d b e v e r a g e s i n d u s t r y an d t he l ar g e s t p r o d u c e r o f i ns t a n t c o ff e e wi t h a 49 % market share. Its market dominance apart from instant coffee is spread over processed milk products (condensed milk, milk powders and dessert mix), infant foods and processed and culinary products (instant noodles, sauces, soups etc.). Established in 1860, its Swiss parent Nestle, S.A. with ownership and a clutch of top selling global brands (Kit-Kat, Polo, Nescafe, Nido, Maggi, Perrier etc.) is o ne o f t h e l ar g e s t an d mo s t p r o f i t ab l e p l ay e r s i n t he pr o c e s s e d f o o d an d beverage industry. with sales at US$ 47.7 billion, it ranks 39 th in the Fortune5 0 0 l i s t t o w e r i n g o v e r i t s c o m p e t i t o r s l i k e , K e l l o g g s , C o n a g r a , G r o u p e - Danone, Kraft-General Foods and others.

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Increasing market dominance: NIL's portfolio comprising over 65 products, marketed through a representative-network in 3000 towns and 570000 outlets, is manufactured at five state-ofthe-art manufacturing plants in India. While its Moga unit produces milk products, infant milk food, weaning cereals, culinary products and beverages, the Choladi unit was set up to produce tea i n 19 6 7. T h e t hi r d p l an t at n an j an g u d was s et u p i n 1 9 89 t o man u f ac t u r e i ns t a n t c o f f e e an d h e al t h be v e r ag e s . It s o t h e r t wo pl a n t s ar e l o c at e d at Samalkha in Haryana and Ponda in Goa. It is currently setting up another p l a n t a t B i c h o l i m , G o a t o manufacture culinary products. The gamut o f operations of NIL could be broadly classified into four categories.

Direct Competition
At present there are three major players Nestle, Cadburys and Amul in the Indian Chocolate market. Campco initially tried to break into market but failed. Brief profile of the same has been entailed below: Cadburys India Ltd. Cadburys India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5Star, Gems and Chocolate Eclairs are the households names in India today. In al l t h e s e g me n t s i . e . mo l d e d c h o c o l at e s , c o u n t c ho c o l at e s an d p an n e d chocolates, it is undoubtedly the market leader. Cadburys has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near Pune), Mithuri and Kolapur. It has a strong distribution network with about 500 distributors in North India and more than 3 lac retail outlets beingserviced all over India. In 1997, Cadbury planned to pump in Rs.80-crore to up production capacity at a couple of Cadburys factories. This cash is exactly double of whats been invested in 1996.
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The Company launched Perk, a wafer enrobed chocolate in 1995. This was reactionary to the launch of Kit Kat and has been able to counter competition. Cadburys Dairy Milk (CDM) - The Flagship brand CDM, the oldest of Cadburys brands was launched in 1956. In the early 90s,a r i s e i n t h e p r i c e s o f c o c o a, i n c r e as e i n t he ex c i s e d u t y an d a f al l i n t h e demand inspired the idea of repositioning. T wo y e ar s i n t he p r o c es s af t e r relaunch Cadburys Dairy Milks market share stood at 25 percent with sales rising by an average 40 percent per annum. Besides CDM Cadburys has a number of e n d o r s e r b r a n d s s u c h a s Fr u i t n Nu t , Nu t Mi l k e t c . Ev e n t ho u g h c o nt r i b u t i o n o f t h es e b r an d s t o t h e c o mp a n y s bo t t o m- l i n e i s v er y s ma l l , t h e y ar e r e q u i r e d i n o r d er t o ma k e a complete portfolio of offering. The Company developed a concentration strategy o n C D M , F i v e S t a r , Cadbury Gems, Cadburys Eclairs, Perk and the latest of its offering Picnic(which has drawn a good response in the market). The Company has also identified sugar confectionery, as a growth sector. Itsfirst offering Googly. Nestle India Ltd. Nestle India Ltd. has been in India for more than 35 years now. The worlds largest marketer of chocolates (became world number one when it acquired R o w n t r e e M a c i n t o s h of the UK) - Nestle, made its foray in the Indian chocolate Industry in November 1990. It launched three products - the milk c ho c o l at e , t h e b i t t e r c h o c o l at e an d C r ac k l e ( a c r u n c h y c ho c o l at e ) - i n t he slabs category and Bar One in count lines.
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C ad b u r y s was qu i c k t o r e ac t , an d l au n c h e d a wh o l e h o s t o f p r o d u c t s i n succession: All Silk milk chocolate, Creamy Bar, and a new version of 5 Star. Nestle, in the beginning did not have its own manufacturing facility. It had an alliance with Camp co to manufacture chocolates. Later, in 1995 a state-of-art manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit took care of the entire Kit Kat production. However, the production tie-up with Camp co still continued. Launch of Kit Kat Kit Kat, one of worlds most popular chocolate, was launched in India in 1995.Within months of its launch, it fulfilled every target Nestle had set. Its launch was accompanied by the launch of Cadburys Perk in order to counter Kit Kat and safeguard the flagship brand CDM. Kit Kat has been able to define anew segment in the industry in the form of the wafer enrobed any time snack. Kit Kat outsells Perk in the outlets where both are available. In the crucial markets of Bombay and Delhi both are running neck-and-neck. It has even said to have threatened the mother brand, Cadbury Dairy Milk. NESTLEs New Launches Brand Allen Splash (Sugar Candies) After Eight Mints Lion Wafer Bars Launch Selected Cities Delhi & Mumbai Delhi & Mumbai
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INDIRECT COMPETITION
Since the target audience includes, consumers of not only chocolates but also of biscuits and confectionery, it faces indirect competition from these product categories. Also, other confectionery products like toffees, candies etc have p r o v e d t o be i n d i r e c t c o mp e t i t i o n ( h o we v e r wo u l d be l i mi t e d s i nc e we ar e targeting small kids segment).

MARKET RESEARCH In o r d er t o r e c o mme n d an d e x e c u t e an ef f e c t i v e s t r at e g y for mar k e t i n g o f goods and services, a systematic market research needs to be undertaken. The buyer preference research would play a vital role in the assessment of c o n s u m e r s t a s t e / p u r c h a s e h a b i t s a n d a b e t t e r u n d e r s t a n d i n g o f t h e consumers mind. In fact the strategy formulation/recommendations in this report of the marketing mix relies heavily on these research findings. A questionnaire was administered (as mentioned i n t h e M e t h o d o l o g y ) amongst people of different age groups and professions. Results from this research provided interesting cues, which were extremely beneficial in the formulation of the recommended marketing mix. The main object of this research/questionnaire was as follows: To find out the current the current taste/chocolate eating habits. To find out the extent of brand loyalty. To get feed back of consumers perception about flavors and conventional outlets. To find out extent of price sensitivity
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Retail outlet preference. Brand preference etc.

OBSERVATIO NS & FINDING

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OBSERVATION S
Based on the basis of the questionnaire research, some of the facts that came to the fore have been listed below. These research findings played a key role in the development of the recommended marketing strategy. Kit Kat and CDM had a high unaided awareness level and also, both these b r an d s en j o y e d a h i g h c o ns u me r p r e f e r e n c e . A mu l i s pe r c e i v e d fo r g i v i n g value for money. Chocolates are no more a childrens item. Mo s t o f p eo p l e b u y c ho c o l at e by i mp u l s e d ec i s i o n . C ho c o l at e s ar e e v e n considered as a good gift option. C o n s u m e r s preference purchase, size/form/taste etc vis--vis place of o f chocolates,

Most of the respondents had a high ad. Recall level for Cadburys Dairy Milk and Kit Kat. When it comes to gifting, usually the receivers are 1 . A fr i e n d o f o p po s i t e s e x 2.Children The idea of making chocolates available at sweet shops, gift shops, ice cream parlors, fast food joints/restaurants was

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asked to be rated. The concept of exclusive chocolate parlors was rated favorably (around 63%). The product category does not enjoy high brand loyalty levels. People are not price sensitive and consider the prices of chocolates available in India, reasonably O.K.. They are ready to pay a premium for good quality. Suitable price for a 40gm chocolate was felt to be between Rs10/- to Rs15/-.

Data analysis &

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Interpretati on

1. Do you consume chocolate?

OPTIONS YES NO

No OF RESPONDENTS 70 30

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INTERPRETATION: This chart shows that 30% of respondents does not consume chocolate While 70% of respondents

2.

How often do you buy chocolate.

OPTIONS Per day Week Month

NO OF RESPONDENTS 40 30 20
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No

10

INTERPRETATION: This chart shows that 40% of respondents buy chocolate per day, 30% on Weekly basis, 20% on monthly and 10% respondents does not buy chocolate.

3. What brand of chocolate are you aware of?

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OPTIONS Cadbury Nestle Amul Other

NO OF RESPONDENTS 45 25 20 10

INTERPRETATION: This chart shows that 45% of respondents are aware of Cadbury brand,20% of respondents are aware of amul,25% of nestle and 10% awareness of other brand.

4.

What influenced you to buy the above stated brand?

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OPTIONS Advertising Dealer Attractive packing Shop display

NO OF RESPONDENTS 60 10 10 20

INTERPRETATION: This chart shows that 60% of respondents are influenced by advertising, 10% by dealer, 10% by attractive packing, and the rest 20% by shop display.

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5. If a particular brand is not available with retailer. You will?

OPTIONS Drop the idea Buy another brand

NO OF RESPONDENTS 30 70

INTERPRETATION: This chart shows that 30% of respondents drop the idea if the particular brand Is not available with retailer, and the rest 70% go with the another brand.
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6.

You purchase of chocolate?

OPTIONS Occasion led (birthday etc.) As a gift Casual purchase Any other

NO OF RESPONDENTS 30 30 20 20

INTERPRETATION:

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This chart shows that 30% respondents purchase chocolate on occasion Led, 30% as a gift ,20% on casual purchase, and 20% on any other occasion.

7.

If you buy chocolate?

OPTIONS A gift Spouse Children Friends

NO OF RESPONDENTS 20 10 30 40

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INTERPRETATION: This chart shows that 20% respondent buy chocolate for a gift purpose, 10% for their spouse, 30% respondents buy chocolate for children, and 40% for their friends. 8. What according to you is the suitable price for 40 gm chocolate?

OPTIONS <10 10 to 14 14 to 20 >20

NO OF RESPONDENTS 15 25 40 20

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INTERPRETATION: This chart shows that 15% respondents prefer less than 10rs for 40 gm Chocolate, 25% respondent prefers 10 to 14rs, 40% prefer 14 to 20rs, 20 % prefer More than 20rs.

9. Ideal chocolate would taste as follow?

OPTIONS Bitter Wafer enrobed

NO OF RESPONDENTS 30 40
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Caramels nuts inside Any other

20 10

INTERPRETATION: This chart shows that 30% respondents prefer bitter taste, 40% prefer wafer Enrobed, 20% prefer caramels nuts inside, 10% prefer any taste chocolates.

10.

One an occasion I would like to a gift a chocolate to loved one?

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OPTIONS Yes No

NO OF RESPONDENTS 70 30

INTERPRETATION: This chart shows that 70% respondents say yes that they would like to gift a Chocolate to a loved one, and30% say no.

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11. Are you happy with the kind of chocolate brands available in India

Today?

OPTIONS Yes No

NO OF RESPONDENTS 76 24

INTERPRETATION:
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This chart shows that 76% respondents say yes that they happy with the Chocolate brands in India, and 24% respondents are not happy.

12. If you want to buy a wafer chocolate, say KitKat and if it is not available,

you would settle for a Bar/Moulded chocolate say 5 star or CDM.

OPTIONS Yes No

NO OF RESPONDENTS 67 33

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INTERPRETATION: This chart shows that 67% respondents say yes, and 33% respondents are says no.

Strategies of the Dominant Brands

It is important to understand the strategies of dominant brands in the market before we go on to analyze the brand communication. Cadbury is the biggest player followed by Nestle, and they cover amongst themselves over 95% of the market share1. The

48

perception map in Exhibit 1 shows the positioning of popular brands graphically.

Exhi bit 1 Positioning of Dominant Chocolate brands in the Indian Market Cadbury Cadbury is the market leader with around 60% of the value sales. It boasts of several strong brands in the category covering almost the entire spectrum of consumer needs. Dairy Milk Dairy milk is the megabrand of the Cadbury Family focusing on consumers of all ages. The core proposition is 'something to celebrate all the good occasions in life with'. The communication proposes that no matter what the occasion of your happiness, Dairy Milk is the perfect way to celebrate. Silk Silk is a premium variant of dairy milk and aims to give an up market stretch to the core brand. The positioning of Silk is
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'Smoother, Creamier and Chunkier'. The communication focuses on the experience of eating chocolate with childlike innocence and unabashed joy. The tagline 'Have you felt Silk lately?' tries to give a refreshing feel to the entire experience of chocolate eating. Perk Perks target market segment in India is the causal snack space that has primarily been dominated by chips and wafers. The target consumers are teenagers and the advertising just highlights its role as a mini snack. 'Thodi-Si-Pet-Pooja' campaign, featuring mischievous teenagers, defined its brand personality. Celebrations Celebrations target market was to replace the traditional gift options like traditional sweets and dry-fruits during festivals. The communication focused on the emotions related to gifting. 5 Star The target segment for this brand has been the youth and children. The brand has continuously focused on variants to add an element of surprise in the chocolate-eating experience. Nestle Nestle ranks second with 31% of the value sales. A large product portfolio and a strong distribution network have helped the company in maintaining its leadership along with Cadbury. Kit Kat The brand's commercial focuses on 'Have a break, have a Kitkat'. Nestle Kit Kat was well received by consumers in early years owing to both the novel 'finger format' of the chocolate as well as the way its advertising celebrated the 'consumption ritual'. Munch

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Munch is the largest distributed brand in its category. It is a wafer chocolate. The campaigns of Munch focus on its crunchy taste. Priced at Rs. 5 it targets the middle class in metros and smaller towns.

Personality Traits
Consider how you would describe the personality of a close friend. Chances are that you would list a number of traits, such as outgoing, kind or even-tempered. A trait is a relatively stable characteristic that causes individuals to behave in certain ways. The Trait theory suggests that individual personalities are composed of broad dispositions called traits. Cattle came up with 16 key personality traits that he uses to describe most aspects of human personality4. We tried to map the personality traits targeted or represented through various commercials. Simultaneously, we tried to match the overall personality of a brand as reflected by overall marketing communication and consumer perception on these personality traits. An interesting finding was the difference in traits observed for Nestle Munchs recent commercial featuring the boxer Vijendra Singh from their overall brand image. For traits like 'openness to change' and 'privateness', not only was the ad in-consistent but also conveyed a brand personality significantly different from the overall brand personality built over the years. Munchs projected brand personality has shifted in six of seven relevant traits from the last ad campaign to the current one. These inconsistent brand personality projections may lead to confusion in the minds of consumers who will rather shift to another related brand with a more consistent personality. Exhibit 2 shows the differences in positioning of Nestle Munch from old to new ads with two of these traits as dimensions.

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Exhibit 2 Differences in Nestle Munch's newly communicated and existing personality traits

Impulsive Buying Behavior and Pricing

Impulsive behavior occurs when the consumer is looking for immediate hedonic benefits. It is commonly associated with urges to smoke, drink, overspend or overeat. 'Impulsive behavior' is defined by 'Consumers experiencing an irresistible urge to consume', which they might even regret later. Whether an individual focuses on cost or the benefit of impulsiveness depends on the chronic values of the consumer, which forms the core of its personality. Hedonic personalities will focus selectively on the benefits than the cost of impulsiveness and are considerable uninfluenced by the costs. Hence, such individuals become insensitive to price aspect when their hedonic urge is driving the purchase decision. Let us explain the growth of the market at the higher end of the spectrum in recent years in chocolate category with this argument. The product offerings on the higher end are of rich chocolate (e.g. silk) based products (associated with taste and
52

pleasure) instead of wafer-based offerings (which serve as a snack). This shows that brands command a better premium when an impulsive urge rather than functional benefits are the prime motivators for purchase. Even though chocolate buying behavior is impulsive, research suggests that the relative accessibility of inputs such as costs versus the benefits of impulsiveness influences impulsive behaviour5. Impulsiveness is unaffected by cost highlighting arguments which explains the ineffectiveness of advertisements discouraging cigarettes, alcohol, etc. When the benefit of impulsiveness was the pleasure of yielding to temptation, the advertisements, that 'triggered the desire' or 'highlighted the benefits of giving in to the temptation' appealed most to the hedonic individuals. However, the prudent personalities give more value to the cost than the benefits. Thus, the benefits are relatively non-influential in judgment. Thus, advertisements that justify the cost of impulsiveness can help provoke impulsiveness in such consumers.

RECOMMENDED MARKETING STRATEGY DESIGN

T he mar k e t s t r at e g y o f t h e fi r m i s a c o mp l e t e an d u n b e a t a b l e pl a n o r an i n s t r u m e n t d e s i g n e d s p e c i a l l y f o r a t t a i n i n g t h e m a r k e t i n g o b j e c t i v e o f company. The formulation of the marketing strategy consists of two steps:1 . S e g me n t a t i o n & t ar g e t mar k e t s e l e c t i o n . 2 . A s s e mb l i n g t he mar k e t i n g mi x . Market Segmentation and Target Market Selection Market segmentation and target market s e l e c t i o n h a v e a n i n t i m a t e relationship with market strategy formulation. The company may focus on the following factors w h i l e l a y i n g d o w n t h e target market.
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1. Geographic Segmentation Ge o g r a p h i c al l y t he c o u n t r y c an be br o ad l y di v i d e d i nt o 3 s u b s e g me n t s -Rural, Suburban and Urban. In the first phase (after the test launch), Urban parts of the country should be targeted. The chosen segment is targeted because Lack of infrastructure, like refrigeration-not to venture rural markets. T h e c o n s u mp t i o n p at t e r n & be h av i o r i n Ru r al In d i a d o e s n o t f i t wi t h t he product attributes and perceived benefits. The limitation of disposable income is another factor that hampers entry in rural areas. S e m i - U r b a n m a y b e c o n s i d e r e d i n t h e s e c o n d p h a s e . A n y e a r a f t e r t h e launch. Within Urban India, the cities with 1 million + population i.e. top 23 metros will be targeted. A soft launch of the brand should be undertaken before taking the brand to these areas. This (test launch) will be undertaken in Bombay, since it(Bombay) is a high consumption city for chocolates. (Source: Nestle (I) Ltd infect Nestls sales peaked out in Bombay, during its initial launch). 2. Demographic Segmentation The demographic variables have been separately addressed to arrive at the target audience. Age:12 years + segment of the population is recommended to be targeted. S mal l k i d s may n o t be t ar g e t e d , be c au s e o f t he n at u r e o f t he pe r c e i v e d product benefit by consumers in that age group, who are inclined towards sweeter and creamier snacks. Further, it may not be easy to get youngsters o f f t h ei r t uc k mo n e y .
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A l s o , c h i l d r e n t o d ay al r e a d y h av e an ar r ay o f c he a p d o me s t i c an d i n t e r n a t i o n al c o n f e c t i o n e r y ( i n t he f o r m o f c h e wi n g - g u ms , lollipops, rolls, lozenges and toffees). Family Life Cycle: In terms of family life cycle it is addressed at all of the following: 1. Young/Single or Married (with/without Kids) 2 . Mat r i c u l a t e s an d C o l l e g e g o e r s 3 . Mar r i e d wi t h n o c hi l d r e n un d e r 1 8. 4 . Mar r i e d o l d c o u p l e / o l d s i n g l e . 5. Empty nest couples. The brand may positioned such that it fits all stages of family life cycle. Income: The income segmentation may be all households with an annual income exceeding Rs. one lakh. Targeted audience may be all households that can afford a television or have access to satellite television. 3. Psychographic Segmentation Social Class: In t e r ms o f ps y c h o g r ap h t he s o c i al c l as s t ar g e t e d i s t he educated upwardly mobile urban middle and upper class. Personality Traits: T hi s s e g me n t es s e n t i al l y c o n s i s t s o f e mu l at o r s i . e . , upwardly mobile, pioneers, freaky, fun loving type of people. These are the people who like to enjoy life and believe in traveling and adventure. Life Style: In terms of lifestyle, it may be aimed at those who favor buying c o n v e n i e n c e p r o d u c t s . T h e y ar e al s o wi l l i n g t o ex p e r i me n t wi t h al t e r n a t e products in place of conventional food items, as the universe of chocolate consumption is changing from occasion led to more casual consumption. 4. Behavioural Segmentation
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The moulded segment of the market is perceived to be the growth engine of the market. Hence, this segment is quite lucrative for a new brand launch. Also, chocolate purchases have moved from being occasion-led to a casual snack. Hence, anytime anyplace snack aspect needs to be established. This segment comprises of people who like to have chances and want to try new things. 5. Learning-Involvement T he p ur c h as e o f a c ho c o l at e i s o f a l o w- i n v o l v e me n t c at e g o r y . It i s an impulse purchase and decision to buy is not pre-planned. 6. Usage Rate The market may be further segmented on usage r a t h e r t h a n a t t i t u d e - Anytime Anyplace Snack. This is a group of consumers that find traditional snacks too heavy. Even though a range of chocolates may be offered, a core brand (concentrated strategy mentioned later) may be launched in the count l i n e s eg me n t . Si n c e t hi s s e g me n t i s t i p p e d t o b e t h e g r o wt h en g i n e o f t h e industry (according to industry sources Mr. Sanjay Verkey, Cadburys India an d Mr . B o h i d a r ) an d t hi s s e g me n t h as a s u b s t an t i al s h ar e o f t he mar k e t (33%).

TARGET AUDIENCE
Following from the above, it is recommended to target consumers who found traditional snacks too heavy. Usage rather attitude is being used to segment. This is the segment that tended to pick up biscuits instead-something they could munch while continuing with their schedule.

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There are 181 million urban individuals in India Our target segment is people living in the top 23 metros (1 million +population), which implies 63 million people. Further, SEC A-B in these 23 metros with Cable & Satellite at home ar e t ar g e t e d ( 9 4. 4 % o f S EC A- B h av e a c ab l e & s at e l l i t e connection).

SUGGESTIVE MARKETING MIX INTRODUCING A NEW PRODUCT:

The objective of the marketing mix developed is:

FOR

To develop a product that is available, affordable, based on local raw m a t e r i a l , a n d a d a p t e d t o t h e taste and the nutritional habits of the population. T he e l e me n t s o f t h e mi x - Pr o d u c t , Pr i c e , Pl ac e & Pr o mo t i o n h av e be e n entailed below: Product As me n t i o n e d e ar l i e r , the t wo mo s t i mp o r t a n t s eg me n t s o f t he mar k e t ar e Moulded and Count line segment (segments have a high share of the market).Also, it can be seen in the findings, the Indian consumer does not recognize t h e di f f e r e n c e be t we e n Mo u l d e d an d C o u n t l i n e s eg me n t . Fu r t h e r , a k ey decision that needs to be taken is to decide whether to have a core brand focus or have a plethora of brands. Here, it would be advisable to launch a complete basket of products covering both the count line and the Moulded c ho c o l at e s eg me n t ( at l e as t i f no t Pan n e d ) . A r an g e o f br an d s c an h el p cushion out risks over the entire offering. Also, it has been that to sustain in the long term, a complete portfolio of chocolates for every taste is essential.
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However, a concentration strategy may be adopted in the first phase, focusing on one core flagship brand. The various product attributes have been mentioned below: Stipulations regarding the use of Hydrogenated Vegetable Oil-HVO (since it contains nickel) may be adhered to. Nickel in chocolates can cause cancer. However, research is still on to prove this. Product formulation should keep this aspect in mind. Packaging: The packages or the cover packs, of the brands can be in Blue, Green and Red color which represents a fun element. The packaging should keep the product crisp, fresh and protected from the harsh climatic conditions in the country, and hence provide a longer shelf life. Sizes: As can be seen in the findings the most popular s i z e i s 4 0 g m s . However, in order to provide a good assortment of offering, the following sizes may be introduced: 15 gm 35/40 gm 80 gm. Super Saver (105 gms.) 200 gms Gift packages: since, chocolates is a very popular gifting option, attractive gift packs may be introduced. The offering is also planned to be distributed through gift shops, hence, attractive packs on the Swiss Coats (small local player) concept be developed. Any foreign brand formulation needs to be tropicalised and hence, adapted to the Indian conditions. Dropping of the international formula (Nestle had faced problems because
58

of this as product could not take the Indian heat)may be considered. Taste: Since, Indians have a preference for soft chocolates with caramels, wafers etc inside (see findings), and the product should appeal to the Indian p al a t e b y i nc o r p o r at i n g t he s e i n t he o f fe r i n g . In t h i s s e g me n t t h er e wi l l b e di r e c t c o mp e t i t i o n o nl y fr o m T r u f f l e . A p an e l o f t ar g e t c o n s u me r s may be called in to sample any fresh batch of chocolates, so as to ensure that the product developed appeals to the Indian palate. The milk and creams in India are different, and workers no way as well trained as abroad. Hence, the product development must keep this fact in mind. The product should also have a high shelf life with a good shelf appeal as well. This so since, chocolates is an impulse buy and a good distinct product look can attract a customer.

Product Differentiation Since, there exists strong competition from heavy weights such as Nestle and Cadburys; the product offering should be well differentiated. Nestle, when it l au n c h e d i t s c ho c o l at e b r an d s i n In d i a , e ns u r e d t h at e ac h b r an d was we l l differentiated - White chocolate(not conventional brown) with a sugary taste t h at ap p e a l e d t o ki d s , Mi l k y b ar mar b l e s di f f e r e n t i a t e d as t h e y h ad wh i t e chocolate centre instead of the brown chocolate core in Gems. Pricing

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Factors like competition, internal costs, and the positioning and corporate objective of the company need to be taken into consideration by a company before pricing a product. Premium pricing (relative to the competing brands not designer chocolates), wi t h s pe c i al e mp h a s i s o n t as t e an d q u al i t y ( mo s t i mp o r t an t at t r i b u t e s - s e e findings) is recommended. The premium pricing does not suggest that the o f fe r i n g i s mad e un a f f o r d a b l e t o t he t ar g e t c o n s u me r . A hi g h pr i c e wo u l d accompany a promise for a better taste and quality. Therefore, the brand(s)taste & quality needs to justify the high price. Further, the product category is relatively inelastic i.e. consumers would not stop buying their favorite brands if the price is increased by a few rupees(see findings). Consumers feel that even if the price of their favorite brand is reduced, they might not buy more of it. Also, there is a general perception of chocolates being Reasonably O.K.(See findings). According to Sarura Business, the high priced (relative to other brands in the market) imported foreign brands have been able to draw a decent response. Primarily, because of their high foreign brand equity. As can be seen in the table (on brand comparison on price, given on the next page), Nestle and Cadburys are pitted against each other and Amul is the cheapest brand in the market. Considering the above, a premium pricing strategy, with the assurance of good quality and better taste, in a market that is not high on price sensitivity may prove to be a success. It may be noted that the price should be only Rs2/- or Rs 3/expensive than Cadburys or Nestles offering. For instance CDM is priced at Rs 15/- for 40 gms

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Nestles Milk Chocolate at Rs 13/- for 40 gms Amul is priced at Rs 10/- for 40 gms The offering in this segment may, therefore, be around Rs 16/While pricing the product, the following duty structure may be considered: 18 percent excise Other state levied duties (after excise) such as Sales tax, etc. (which vary from state to state)-within 10 to 20 percent. Placement: The success of any FMCG product thrives on distribution. Factors like fi n a n c i a l cost e ff e c t i v e n e s s ) p er i s h ab i l i t y o f t h e pr o d u c t ; r ep e at o r d er s ; m a n a g e r i a l c a p a c i t y a n d u n i t v a l u e o f t h e p r o d u c t n e e d t o b e c a r e f u l l y analyzed while setting up the distribution framework of the company. The p r o d u c t category is essentially a pull market. However, t h e c h a n n e l members provide greater visibility to the product. This is extremely important s i n c e c h o c o l a t e s i s a l o w involvement impulse purchase product. The recommended distribution framework has been entailed below: Recommended Distribution Logistics The first task in hand should be, to effectively map the territory into smaller more accessible and controllable units. An effective territory mapping needs tobe done not only to provide an efficient coverage of the market but also to provide growth opportunities to the constituents (stockiest), as the company grows. The recommended distribution chain would be as follows: The Company

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Carrying & Forwarding Agents Stockiest/ Distributors Whole sellers Retailers Carrying & Forwarding Agents: T he s e ma y be ap p o i n t e d at t wo o r mo r e State(s) of operation of the company. Carrying & Forwarding agents work on a commission basis 3% (industry norms) of t h e g o o d s h a n d l e d . I t i s recommended that the country keeps about 4 to 6 weeks of inventory at the C&F level and a commission structure which is in keeping with the industry norm. Therefore a 3 percent c o m m i s s i o n o n t h e i n v o i c e v a l u e m a y b e provided to the agents. Stockiest: A s t o c k i e s t p r o v i d e s a l o c a l d e l i v e r y p o i n t f o r t h e manufacturer/marketer. They store the products, break bulk, and distribute to the retailers. With greater no. of retailers now seeking credit from the retailer, efficient management of collection has become a vital part of the stockiest job. The main problems that new product faces is that of getting experienced and effective channel members. As existing marketing marketer/manufacturer can pi g g y b ac k o n t h e e xi s t i n g c h an n e l s t r u c t u r e . A n e w c o mp a n y wi l l h av e t o provide greater incentives convince channel members to stock the product o f f e r i n g . H e n c e , a n i n n o v a t i v e m e a n s o f c h a n n e l h a n d l i n g n e e d s t o b e adopted:

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C o m p e t i t i v e c o m m i s s i o n t o t h e s t o c k i e s t - a r o u n d 5 . 6 6 % o n t h e i n v o i c e (industry standards 5.66%) The efforts of the sale representatives employed by the stockiest to get orders may be supplemented by the manufacturers sales force. Retail outlets to be serviced at least four times in a month (at least once a week) Distributors (stockiest) to maintain stock of not more than 15 to 20 days Since, distributors are to maintain air-conditioned go downs, in summers the A/C expenses may be borne by the Co. The Merchandiser concept: Merchandisers may be appointed by the company(salary to be borne by the Co.) in order to keep a constant touch, and to feel t h e p u l s e o f t h e m a r k e t . These merchandisers would also facilitate implementation of various schemes of the co. Regular job would include: To check if products have reached expiry , Proper setting of shelf space POP material displays, etc. More transparent and clearer claims handling policy

Wholesaler: Whole sellers prime concern is buy in bulk and sell at the fastest rate. The aim of any distribution chain of mass-market product category like c ho c o l at e s wo u l d be t o e x p a n d i t s r e ac h i . e. t h e no . o f o u t l e t s s t o r i n g i t s pr o d u c t s . T hi s may no t be p o s s i b l e e ve n wi t h a we l l e s t ab l i s h e d
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s t o c k i e s t network. Hence, wholesalers play a significant role in supplementing the stockiest effort send in providing a better reach to the product. Retail Outlets: It is extremely important for any chocolate brand to have a we l l en t r e n c h e d r e t ai l p r e s e n c e . Re ac h I t h e k e y. C o n s i d e r , Ge n e r al De Confetaria (marketer of Boomer Bubble gum) having its products available in400000 outlets around the country, and Perfetti with 250,000 outlets. The aim would be to expand the retail network as wide and deep as possible. A blitz force tactic for retail chain enhancement may be followed. A blitz force is a commando unit hired to target specific work. About 5 to 10 salesmen, recruited from the same locality will be roped in to penetrate a specific area. Being far more familiar with the area, they are expected to create about 10 to1 2 ne w o u t l e t s d ai l y . T h i s t as k o n a l at e r s t ag e may b e en t r u s t e d t o t he distributors salesman. The biggest problem in distributing a product category like chocolates is lack of infrastructure. The product needs to be kept in refrigeration (more so, in summers)-limiting the points at which it is available (ideal temperature needed for chocolates is 18 to 25 degrees). Hence, summer see sales suffer. Demand falls by almost two-thirds in the summer months. To counter this, the Co. can Cool/chilled vans may be operated in summers (for C&F to Stockiest transit of goods). Because of only a seasonal requirement, these may be out sourced. Insulated boxes, Ice/chilled pads and packs, Ice surrounded Sintex tanks, t o we l s et c ma y be us e d t o e ns u r e t h at t h e p r o d u c t r e ac h e s t he r et ai l e r s without losing its form. Considering the importance of refrigeration (specifically in summers), Vizzy coolers may be installed. These coolers not only provide refrigeration but also a good POP value. Further,
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while distributing chocolates, it must be ensured that the brand has a deep retail coverage not a selective presence. Finally, while deciding onto the selling outlets, certain unconventional outlets may be considered. These include a. Sweet Shops: The product may be kept at traditional Sweet Shops. More so, during festival times. b. Gift Shops: As the idea of gifting chocolate is becoming more popular amo n g t he t ar g e t e d s eg me n t , i t wo u l d be pr o f i t a b l e t o e ns u r e t he availability of chocolate chocolates at various gift shops. c. Stationary/Book Shops: Teenagers, is a lucrative segment with a high c o n s u mp t i o n r at e. T h e y f r e q u e n t b o o k s ho p s an d mag a z i n e s t o r es quite often. Hence, making chocolate available at these outlets may be considered. d. Ice Cream Parlors : In India, ice cream is treated as a fun product and a sweet dish or a desert after meals. Both these attributes match with chocolate consumption habits. Hence, ice cream parlors may prove to be b e n e f i c i a l i n pr o v i d i n g gr e at e r r e ac h t o t he p r o d u c t . He r e ag a i n , c h ai n s l i k e Do l l o p s , e t c . may be u s e d i n o r d e r t o f ac i l i t at e gr e at e r reach. A strategic distribution tie-up may be reached with ice cream c o mp a n i e s s u c h as Kw al i t y Wal l s , V ad i l al s et c fo r distribution of c h o c o l a t e s along with the d i s t r i b u t i o n o f i c e c r e a m s t h r o u g h t h e Vending Trolleys. e. Fast-food Joints/Restaurants: A s a d i s c u s s e d a b o v e t h a t o n o u r country the chocolates can be served as a sweet after meals, hence separate counters may be installed at various fast food joints such as Mac Do n al d s , Ni r u l a s et c . T hi s wo u l d p r o v i d e t h e b r an d , n o t j u s t greater visibility but also

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valuable sales. Also, these infrastructure to store chocolates.

outlets

possessadequate

f. Jewellery Shops: The leading jewellery shops in the city entertain their customers with cold drinks and or tea. These are not suited to all. The complimentary chocolate treat at the particular shop would only status of treating his clients differently and the children folk would also enjoy t h i s s p e c i a l t r e a t m e n t a n d l e a v e f i d d l i n g w i t h t h e p r e c i o u s g o l d garments. g. Exclusive Chocolate Parlors : As can be seen in the findings, there has been an overwhelming response to the idea of buying chocolates f r o m ex c l u s i v e c h o c o l at e o ut l e t s . He n c e , de v e l o p me n t o f ex c l u s i v e chocolate parlors may be considered. Promotion: This involves communicating persuasively to the consumers, in o r d e r t o a r o u s e t h e i r i n t e r e s t i n t h e product. A detailed promotion plan involving advertisement, sales promotion and public relations is proposed. Positioning: T he p o s i t i o n i n g o f t he v ar i o u s br an d s i n t he mar k e t h as b e e n listed below:

Cadburys Brands Cadburys Dairy milk Fruit n Nut Creamy Bar

Positioni ng brand

Nestles ng

Positioni

The Real Taste Classic of Life chocolate Positioned at Adults as an

Milk Positioned as an affordable, enriched milk chocolate

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Roast Almond Nut Milk Crackle Boonville 5 Star / Perk

Impulse anytime purchase Self expression Values attached Positiond as a snacking consumption Have a Break, Have a Kit Kat Positioned as a trendy,cool anytime snack

PerkKit Kat Positionesed as a snacking consumption. Break/Crisp/Dou Thodi Si Pet ble Decker Pooja 5Star-Energy Bar Reach for the Bar One Stars Gems/Eclairs Butterscotch Caramels/Overt ures Nutties/All Silk Tiffins Relish Positioned as Variety, gifting and taste preference

The flagship brand may be positioned as a premium (see pricing) anyplace, an y t i me s n ac k . Si n c e , s n ac k i n g p r o p o s i t i o n i s t h e g r o wt h en g i n e f o r t he i n d u s t r y , p o s i t i o n i n g s ho u l d h e n c e , be fo c us e d o n t h at . T h e t wo d r i v e r s - i mp u l s e p ur c h as e an d ne e d t o s n ac k .

Advertisement Plan
The Advertisement plan could be as under:
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Corporate objective: The corporate image should be built over a period of time, so as to reinforce consumer confidence in the brands of the company. T hi s i s al s o e s s e n t i al t o c o u n t e r c o mp e t i t i o n , s i n c e o ve r a p er i o d o f t i me , names such as Cadburys, Nestle have attained high levels of recognition and assurance.

Advertisement Objectives
To position the product as a high quality brand, with a wide range of offering, providing, fun anytime, anyplace products. To create awareness about new flavors. Induce consumer trials. Build corporate image To undertake competitive advertisement. The Budget: Considering the fact that the market is dominated by bigwigs such as Cadburys and Nestle, aggressive competitive advertising needs to be undertaken. Since both Kit Kat and Perk are allocating 60 to 70 percent of their total ad budget on chocolates, an allocation of about 20 to 25 percent of the projected turnover may be sufficient in the first year. After which about 10 to 12 percent may be used to sustain the brands. Message: The message design will be consist of following; Appeal: Chocolate is basically a fun product and exchange chocolate as gifts i s g et t i n g p o p u l a r t he s e d ay s . An E MO T I O N A L ap p e al o f Lo v e c an be designed. Apart from it chocolate can be highlighted by fun elements in life can be positioned as MOOD ELEVATORS. An ASPIRATION appeal would also be helpful. Presentation: The design of advertisement will be the setup of fun scene like picnic, college, campus, sports.
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Ground, partly time can be suitable so that people can Associate the chocolate with fun. Message Source: For print media the message source will be the copy part and creative advertisement design. For electronic media, the source will be whole family unit, younger enjoying exchanging and eating chocolate. Media: Print Media: Will be the major magazines read by the target segment i.e.., India today, society, famine, stardust etc. P.O.P.Material induce impulse purchase. Electronic Media: Since the whole of target segment watch Satellite TV during pr i me t i me an d ad v e r t i s e me n t wi l l be f e at u r i n g s h ar e fo r 3 o r mo r e t i me t o l e av e an i mp a c t . A p ar t fr o m i t c o mp a n y wi l l b e s p o n s o r i n g t he f u n r el at e d programmes on DD and Satellite TV. Public Relations: I.The company will hold a press conference a n n o u n c i n g i t s a r r i v a l i n India and will highlight its global achievements. II.Company has plan to sponsor events like 2 v i z . , s k i i n g r i v e r r a f t i n g , yachting etc. III.Company will also sponsor fun based TV programs. Sales promotion Activities: To induce consumers to try the new chocolate and to get the product pushed in the market the sales promotion plan should include the following: Trade promotion: The Company will have to offer lucrative trade promotion schemes, in order to push primary sale. These include incentives to stockiest f o r p us h i n g t h e s al e o f c ho c o l at e s . At t he
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r et ai l l e v e l , t he fo l l o wi n g t r ad e promotion measures may be adopted: Schemes such as, a certain percent off on the purchase of Rs 5000 or Rs10,000 worth of chocolates. A box of chocolates free with every dozen purchased. Shop Displays/Vizzy Coolers linking them to sales Apart from these, Window Shelf space may be purchased outright. Consumer Promotion: Some of the consumer offers that could be introduced are: 1. Free gifts like pen, comics etc., on return chocolate wrapper. 2.Money Savers 3 . C ho c o l at e s i n a t o y t r u c k e t c . 4.The Company can announce consumer c o n t e s t s ( w i t h p r o o f o f purchase) with attractive prizes, supplemented by an advertisement campaign. Point Of Purchase Material: POP is of extreme importance, to a product category like this. This is so, since sales are impulse /casual driven. Hence, heavy point of purchase advertising in the form of danglers, chocolate dispensers, etc. may be used.

Market Testing Plan

The company should test the product before it goes national (23 metros withmillion + population). This is so because: 1.It would reduce the risk of failure in the market where it goes national,by validating the marketing mix. 2 . Fac i l i t a t e v al i d at i o n o f po s i t i o n i n g . 3.Allow corrective action through incorporation of consumer feedback. For test marketing the chocolates, the plan may be as follows:

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1.Test Objectives: To validate the brand names, new outlets, etc and tomeasure the sales volume, pricing and promotion policy. Competitor reaction can also be analysed. 2.The product may be launched in Bombay ( as a soft(test) launch). Thisselection was based on : Bombay is uniformally represented by the target segment Competitor activity is high. Also, Nestle was able to wrest a significant marketshare from Cadburys when it was launched. Bombay is representative of the target segment.

IMPLEMENTATION
A well designed marketing plan counts for n o t h i n g , i f n o t i m p l e m e n t e d p r o p e r l y . S u c c e s s i n t he mar k e t p l ac e d e p e n d s u po n t h e way t h e pl a n i s implemented. The launch is recommended to b e b e f o r e w i n t e r s - s a y September or October, since That period would facilitate high Diwali sales, and D u r i n g w i n t e r s t h e r e w o u l d n o t b e m u c h n e e d f o r r e f r i g e r a t i o n . H e n c e company would get valuable time its infra in place. The success of the brand would largely depend on the following: Sales Distribution Network Quality standards Research and Development-continuous innovative products Technology support

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CONCLUSION
T he gr o wt h an d e x p a n s i o n o f t he In d i a n c ho c o l at e mar k e t i n t h e p as t h as -been hampered, due to stiff excise duties on chocolates (at 18 percent while other agro based products are being charged as low as 8% and a few, even0% excise) and non-availability of quality cocoa in the country. Also, import of chocolates has been put in the OGL category, with duties being reduced (in a phased manner). The industry has made recommendations to the Indian government to go back to the Special item list category, in order to safeguard the domestic industry. Ho we v e r , c o n t i n u o u s mar k e t i n g f o c u s b y t h e pl a y e r s i n t he mar k e t h as resulted in the industry looking up like never before. These companies/brands h av e be c o me mu c h mo r e mar k e t s av v y . T he In d i a n c h o c o l at e mar k e t is transforming and new players (Sara Lee is planning to set up base in India)are entering the market. Hence, considering the low per capita consumption of chocolates, the future of the industry seems to upbeat.

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ANNEXUR E
73

1. Please rank the following attributes in a chocolate on a scale of 1-7 According to their importance to you? (1-most important, 7-least Important) a. Taste b. Quality c. Packaging d. Price e. Flavour f. Add-ons (wafer, nuts, etc) g. Brand image

2. If particular brand is not available with the retailer, you wil74

a. Drop the idea of buying a chocolate

b. Go to another retail outlet

c. Try another (competitors) brand

3. You purchase (of a chocolate) is

a. Occasion-led (say on a birthday, etc.)

b. As a gift

c. Casual purchase

4. If you favourite brand is a few Rs expensive than it is, you would still

Go for it.

a. Yes
75

b. No

5. A sale promotion scheme like Rs 2/ off, 10gms extra, a candy free, etc.

Would affect your purchase decision.

a. Yes

b. No

6. An ideal chocolate would taste as follows-

a.

Bitter

c.

Wafer enrobed

d. Caramels, nuts inside

e.

High on sweet
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f. Any other (please specify)

7. Most of my chocolate purchases are pre-planned.

a. Yes

b. No

8. What size of a chocolate do you normally buy?

a. 15gms

b. 25gms/30gms

c. 80gms

d. Super saver packs(105gms)

e. 200gms
77

9. The price of your favourite brand or preferred brand of chocolate is

a.

High & expensive 77

b. Reasonably ok

c. cheep

10. Are you happy with the kind of chocolate brands in India, today?

a. Yes

b. No

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11. If the price of your favourite brand is reduced, you will buy more of it?

a. Yes

b. No

12.

If you want to buy a wafer chocolate, say kitkat and if it is not available

you would settle for Bar/Moulded chocolate, say 5star or Cadburys dairy

milk.

a. Yes

b. No

13. On an occasion I would like to gift a chocolate to a loved one.

a. Yes
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b. No

14. What according to you is the suitable price for a 40 gm. Chocolate which is

Of good quality and flavor(which will be available for the first time).

a. Below Rs.10/-

b. Between Rs.10/-to14/

c. Rs. 14/-toRs20/-

d. More than Rs.20/-

15.

Do you consume chocolate

a. Yes

80

b. No

16.

How often do you buy chocolate

a. Per day

b. Week

c. Month

d. No

17.

What brand of chocolate are u aware of

a. Cadbury

b. Amul

c. Nestle

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d. Other

18.

What influenced you to buy the above stated brands?

a. Advertising

b. Dealer

c. Attracting packing

d. Shop display

19. will?

If a particular brand is not available with retailer. You

a. Drop the idea

b. Buy another brand

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20.

Ideal chocolate would taste as follow

a. Bitter

b. Wafer enrobed

c. Caramels nuts inside

d. Any other

21.

If you buy chocolate?

a. A gift

b. Spouse

c. Children

d.

Friends
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BIBLIOGRAPHY
Kotler Phillip, Marketing (Prentice hall of India). Business today Business World, Business India, Economic Times CMIE reports indiainfoline.com Internet sources www.indiainfoline.com www.domain_b.com www.agencyfaqs.com
84

Management,

Millennium

edition.

www.nil.comwww.cadburys.com www.web-enable.com/industry/enabling-scm.asp www.cadbury.co.in www.financialexpress.com www.business-shandard.com

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