Essay: Marketing Strategies Of European Chocolate Industry - Analysis Of Cadbury

Company Description (Cadbury)

Discuss About The Marketing Strategies From European Chocolate Industry.

Conducting a marketing analysis play an important role in the growth and success of an organization. It assists the organization to understand the impact of marketing philosophies applied by it. In addition to this, the organizations conduct external analysis to know about positive and negative effects of external factors (Hill, Jones and Schilling, 2014). By analyzing the marketing concepts, the organizations can analyze their strengths. This report is focused on the analysis of Cadbury UK with the emphasis on Dairy Milk Chocolate. Cadbury is an international manufacturer and distributor of confectionary products. Currently, the company is operating its business in more than 50 nations worldwide.

The report includes some marketing philosophies which are used by the company in United Kingdom. After analyzing these concepts, major strengths of company are included. Furthermore, it consists of the environmental analysis of the company by using two strategic frameworks i.e. PESTLE analysis and Porter’s five forces analysis. At the end, it provides some recommendations for the organization so that it can enhance its market share, profitability and sustainability for Dairy Milk. Recommendations also provide the information about the segmentation, targeting and positioning of the company.

Cadbury is one of the biggest chocolate manufacturing organizations all over the world. In England, the company was founded by John Cadbury in the year 1824. Now, the company has become second largest confectionary firm after Wrigley. It is headquartered in Uxbridge, West London. Currently, Cadbury has its business operations in more than 50 countries worldwide. The organization has become popular fir its Dairy Milk Chocolate, Crème Egg, Roses selection box and other confectionary products. It employs more than 50000 employees in 50 countries (Cadbury, 2018). The operations and products of the company enable it to position itself on fourth place among suppliers of chocolate confectionary all over the world. Among all the brands, the most popular and successful brand is its Dairy Milk that was first manufactured in 1905 (Cadbury, 2018). Dairy Milk has become very popular as melted chocolate in UK in the terms of revenues and profits. The major pillars of company’s success are like money value, superior quality and promotion process. Now, the company is operating its business in various geographical areas such as Ireland, Britain, Middle East, America, Europe, Asia Pacific etc. Ireland and Britain are the largest revenue generating areas for Cadbury Organization (Cadbury, 2018).

Marketing Concepts and Philosophies

Marketing concepts are the philosophies which a business uses to recognize and meet the demands and expectations of its consumers, benefitting both the company and its customers. Different businesses adopt different marketing concepts and philosophies because same philosophy cannot result in profit to each business (de Vries, Gensler and Leeflang, 2017). Dairy Milk is the most popular brand of Cadbury for which this company is using different concepts like relationship marketing and marketing mix approaches. The marketing concepts applied by Cadbury are stated below:

Relationship marketing is an important approach of Holistic concept of marketing. It is the marketing in which an organization makes efforts to develop strong and satisfactory long term relationship with customers to generate more profits and revenues for the success of business. It is an important aspect of customer relationship management that emphasizes on the customer engagement and customer loyalty rather than individual sales and customer acquisition. Cadbury is actively engaged in relationship marketing with the objective to increase its customer base. It is one of the major strengths of the company in delivering value to the targeted customers (Cawsey and Rowley, 2016).

Cadbury Dairy Milk is successful in relationship marketing. It offers a high quality of chocolate and its customers are very loyal and satisfied. There are four components of relationship marketing on which Cadbury focuses to create and maintain effective relationships with its internal and external stakeholders. These components are given below:

Customers

In United Kingdom, the organization is continuously making efforts to make better relationships with its customers. It manufactures the products considering the tastes and preferences of customers. It conducts surveys, questionnaire and after sale feedback so that it can understand the needs of customers towards chocolates (de Vries, Gensler and Leeflang, 2017). In UK, the customers are very loyal because they offer better quality of chocolates. They do not switch to other chocolate brands and they always prefer to buy Dairy Milk chocolate.

Channels

Cadbury has an extensive distribution network that has different channels all over the country. Dairy Milk chocolates of Cadbury are available on retail stores, online stores, bakeries etc. It has enabled the organization to approach a large population in United Kingdom. Thus, it is the most popular chocolate brand in the country.

Partners and suppliers

Cadbury Dairy Milk has various partners in United Kingdom like retail stores and cocoa suppliers. Organization has developed effective relations with these partners. It makes investment in the farming of Cocoa (Rothaermel, 2015). It assists the cocoa farmers through its corporate sustainability efforts. It is making them aware about major issues like gender equality and child labor. It is making its relationship with suppliers and they provide good cocoa power to the company.

Relationship Marketing

Marketing mix is an approach that is the foundation model in marketing management. Marketing mix can be described as the set of marketing strategies which are used by a firm to attain its predetermined marketing objectives. The marketing mix includes four strategies which are adopted by an organization to approach a large population (Abril, and Rodriguez-Cánovas, 2016). In United Kingdom, Cadbury is implementing effective marketing strategies for its Dairy Milk chocolate. These components are stated below:

Product:

In United Kingdom, Cadbury offers a diversified range of products that can be considered as one of the biggest strengths of Cadbury. Cadbury Dairy Milk is one of the most popular and selling products of Cadbury. It is made of real chocolate and its ingredients include butter, milk and cocoa. It is making continuous improvement in the quality and taste of Dairy Milk (Wolde, 2016). Under this, the major objective of organization is to gain competitive advantage over the products of competitors. There are different categories in Dairy Milk Chocolate brand like Dairy Milk Bubbly, Roast Almond, Crackle, Caramel, Puddles Mint, Silk, Little Bar and Whole Nut etc. In addition to this, it offers the chocolates in effective packaging in festive seasons (Cadbury, 2018). It assists the organization in attracting more customers towards its products. By this, the company is able to enhance its goodwill in UK.

Price

It is a significant component of marketing mix approach as it determines whether the people will purchase the product or not. The price range of Dairy Milk Chocolate is fixed on the basis of quality and quality of product. The prices for different chocolates vary, for example some products are available at premium prices like Silk, Bubby etc. However, the prices of dairy milk chocolates are fewer than its competitors (Solomon, 2017). By implementing an affordable pricing policy, the company seeks to attain its vision i.e. “Cadbury is in every pocket”.

Place

In United Kingdom, Cadbury Dairy Milk chocolates are manufactured in Bourneville in Birmingham. After the production, the chocolates go through the quality check process. The organization has established a wide distribution network that includes supermarkets, retail stores, grocery stores, confectionary shops etc. In this way, the company is able to approach a large population in both urban and rural areas of United Kingdom.

Promotion

The major objective of promotion strategy is to interact with the customers. Cadbury is using different advertising tools to promote its chocolates in United Kingdom. It has been noticed that this organization is using newspapers, television, posters, hoardings and social media for marketing Dairy Milk Chocolates. It has adopted some attractive taglines or slogans like “Kuch meetha ho jaaye.” This approach assists the company in stimulating a large number of consumers. In addition to this, it makes the promotions by sponsoring promotional and sports events in UK. To encourage the youngsters, Cadbury hires the celebrities and superstars for advertisement of chocolates.  

Marketing Mix Approach

Thus, after analyzing the above marketing concepts and philosophies, it can be stated that market concepts and philosophies of company are very effective. They assist the organization in in increasing its customer base and gaining competitive advantage over its competitors. The major strength of these approaches is that company is able to maintain and enhance its brand image in UK confectionary industry. Through relationship marketing approach, the company is able to maintain better relationships with its different stakeholders like customers, suppliers and partners. In addition to this, marketing mix approaches assist the company in approaching a large customer base through extensive distribution channels and effective promotional tools. The biggest strength of company’s approach is that it is producing the Dairy Milk Chocolates with higher quality materials like cocoa, milk, butter and sugar. In this way, the marketing concepts and philosophies of Cadbury have various strengths which have positive impact on overall business of Cadbury Company in United Kingdom.

External environmental analysis is the process of evaluating the external and marketing factors which have negative and positive effect on the company’s business. There are various factors which affect the growth of Cadbury in United Kingdom. These factors are analyzed by the use of different frameworks i.e. Porter’s five forces analysis and PESTLE analysis.

Industry Rivalry (Moderate)

There are various organizations which are offering confectionary products in United Kingdom. These organizations are competing against Cadbury and planning to take over the control the Cadbury has over many years. There are some companies like Nestle, Ferrero and Hershey’s which are offering chocolates made with cocoa and milk (Bharucha, 2016).

(Source: Ramli, 2017)

They have affected the business of Dairy Milk chocolate in United Kingdom. The competition among these brands is strong as they offer same types of products from same types of stores. It has an adverse impact on the market share of the company.

Bargaining Power of Buyers (Moderate)

Cadbury has two types of buyers i.e. customers and retailers. Retailers are the major buyers which have a large impact on Cadbury. There are some large retailers like Tesco, Asda in United Kingdom. These customers are competing for the shelf space and challenge of backward integration especially with the branded products like Dairy Milk chocolate. Consumers of Dairy Milk are scattered all over the country. There are various players which offer the similar chocolates at lower cost than Cadbury. This is the major component of marketing environment as it is directly related to the revenue generation.

Bargaining Power of Suppliers (Low)

Suppliers are the major group that has a large impact on the production of final product in terms of price and quality. The major commodities which are used in manufacturing Dairy Milk chocolate are milk, sugar and cocoa. In United Kingdom, bargaining power of suppliers is low as there are various suppliers of raw materials (Afoakwa, 2008). Cadbury can purchase the raw materials for cheaper and in bulk than a medium sized firm could.

Threats of new Entrants (Low)

The threat of new entrants is low in the confectionary industry as there are already established players in UK market. These companies are Nestle, Hershey’s, Lindt etc. It creates a barrier for entry for another organization to start. In addition to this, the entrants need higher capital requirements in the initial stage (Hollensen, 2015).

Threats of Substitutes (Moderate)

The threat of substitutes is moderate for Cadbury in UK confectionary industry. In the country, supermarkets are trying to copy the famous chocolates and offer their own brand at cheaper price. There are large number of substitutes for chocolates like chips, candies, beverage and fruits.

Political and Legal Factors

Political instability in United Kingdom is the major factor that has adverse impact on the prices and supply of Cadbury’s products. In the country, the organization needs to comply with different food and drug administration guidelines. In the country, the recent acquisition to Kraft foods makes a big issue with the stakeholders. The company is slipped from British ownerships. Cadbury has faced the issues related to working hours of employees. The legal actions which are taken to cut the factory hours may impact the Cadbury’s production adversely. Cadbury is restricted to comply with all the health and safety standards as many people faced health and obesity issues due to its chocolates (Chokshi, et al, 2016).

Economic Factors

The economicslowdown in the country has a large impact on the business operations of Cadbury. The customers are trying to cut their budget that affects the sales of chocolates of Cadbury. Apart from this, the disposable income of people is very high in the country that has positive impact on their purchasing power towards sweets and chocolates. In the year 2011, Cadbury was acquired by Kraft Foods that has made a good value to the shareholders. It has increased the profitability and good will of Cadbury in United Kingdom (Gutiérrez, 2013).

Social Factors

However the introduction of Dairy Milk Chocolates has offered a better experience to the world. The company has used various advertisements and programs to attract people towards this product. Apart from this, a study of recent years indicates, the population in United Kingdom is generally prone to crisps and snacks rather than chocolates, gums and candies. This drastic change in people’s choices has affected the sales of Cadbury chocolates (Gupta, 2013). The increased concern towards health impacts the sales of Cadbury Chocolates.

Technology Factors

The technologies factors make more sense in the growth of Cadbury in the research and development division. There are some technological implementations like new brew machines to blend cocoa and coffee have positive impact on the future development of Cadbury (Steenkamp, 2017). Apart from this, adoption of updated technologies increases the overhead expenses of the company.

In this way, the external analysis states that Cadbury has moderate business and marketing environment in United Kingdom. However, Cadbury Dairy Milk is very popular and most selling product of Cadbury in United Kingdom (Ho, 2014). The marketing analysis shows that company has intense competition but it can control the market by offering chocolates with higher quality and affordable prices. The external environment in United Kingdom is favorable for Cadbury Dairy Milk chocolate.

From the above analysis, it can be stated that there are various marketing and external factors which have both positive and negative impact on the business of Cadbury Dairy Milk in United Kingdom. In the market, there is an intense competition that has affected the market share of company in UK. But still, company is able to maintain its brand image as one of the largest chocolate manufacturers in UK. Looking at the above analysis, it can be said that Cadbury is totally dependent on the confectionary items (Konstantas, et al, 2018). The international experience of this organization is less than its major competitor i.e. Nestle. The company is unable to implement effective marketing strategies which influence its market profitability in United Kingdom. In addition to this, it is only focused on manufacturing quality product and less focused on the sustainable marketing. It does not engage in societal and social responsibility activities. It affects the brand image of the company as today’s population has become more concerned about environment and natural resources (Thomas, 2017). These are the areas of improvement at Cadbury.

After considering the above areas, the below-given recommendations are made for the Cadbury in United Kingdom. These recommendations are given below:

To enhance its strategic position in the market, Cadbury needs to focus on primary part of marketing management process i.e. STP (Segmentation, targeting and positioning). The company should target the appropriate customers by analyzing their needs and tastes towards chocolate products. After considering the tastes and preferences of customers, the company should apply the market segmentation theory that states a firm should target a market by identifying different characteristics like behavioral, geographic, psychographic and demographic and mass marketing (Jha, Saini and Kaur, 2017). Under demographic segmentation, the organization should target the people on the basis of their income level such as higher income level people for premium chocolates like dairy Milk Silk and Bubbly and other income groups for other basic products like Dairy Milk and Dairy Milk shots. It will assist the organization in increasing its sales in different countries.

Under behavioral segmentation, the company should target the people as per their preferences like occasional buyers. They buy the chocolates on any special occasions or any festival. To attract these customers, Cadbury should focus on the packaging of products as it should be festive and attractive. Targeting the mass population, the company will be able to serve a broad range of market i.e. from adults to children. In addition to this, the company should make a large focus on female adults because they love to consume chocolates most (Ramli, 2017). It will be profitable for Cadbury as the female population is the biggest customer of chocolates not only in United Kingdom but also in other nations. It will assist the organization in generating funds from the people from every income group.

Cadbury should position itself in UK market that youth see this as a synonym for chocolate. In the beginning, the company should position itself as special, carefree and spontaneous. It should use an impactful tagline so people get attracted towards this (Rosenbaum-Elliott, Percy and Pervan, 2015). It will assist the organization to increase its customer base eventually that will increase the sales of Cadbury Dairy Milk chocolates.

Furthermore, it is hereby recommended that Cadbury Dairy Milk should apply the Keller’s brand equity theory for brand building. According to this theory, to build a strong brand Cadbury should shape how the customers feel and think about its chocolates. Considering the needs and demands of customers, the company should build an appropriate experience so that they can have positive thoughts and perception about company’s products. For example, Cadbury should introduce a new brand of sugar free dairy milk chocolate in the market (Huang and Sarigöllü, 2014). As mentioned above, the people are becoming very concerned about the health and obesity issue due to chocolates. So the company should introduce a dietary chocolate under its Dairy Milk brand. By doing this, it will be able to entice more and more customers towards the brand. In this way, the company should make focus on brand building and product offering to enhance its profitability (Krishnaswamy, 2017). In addition to this, it should focus on social and societal marketing.

The company can implement the above recommendations in process by following the below plan:

Actions	Duration	Responsible Person	Related Department
Conduct a marketing research	2 weeks	R&D manager	Research & Development division
Analyse the needs and preferences of customers	3 weeks	Marketing managers and supervisors	Marketing department
Target the customers according to their needs	2 weeks	Marketing managers	Marketing department
Make efforts to build brand	3 weeks	Marketing Executives	Marketing department
Introduce new products considering health and obesity	4 weeks	Top managers	Senior management (Ramli, 2017)

Conclusion 

In the limelight of above report, it can be concluded that Cadbury is operating its business as one of the largest manufacturer in UK confectionary industry. The company is operating its business successfully but it has faced some issue due to some external factors. In this report, there are some external factors which are beneficial for the growth of Dairy Milk product. Apart from this, some factors have negative effects on the business of Dairy Milk in UK. The company should focus on delivering effective value to the customers by the use of effective marketing and branding strategies.

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