Final Cadbury Ok

International marketing of the

By: Taherali Shaikh To: Prof. Devang Desai

Index Sr. No

Particulars

Page 1

Pg. No

1 2

Introduction of company The chocolate industry

3 5

3

Global marketing environment

8

4

Global cultures & buyer

12

5

behavior

14

Market entry strategies

19

6

Product & branding strategies 7

Global communication

21

8

strategies Supply chain & distribution

25

9

Pricing strategies

28

10

SWOT analysis

31

11

Finding

32

12

Recommendation

33

13

Bibliography

34

Introduction of company Company Overview Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. Our heritage starts back in 1824 when John Cadbury opened a shop in Page 2

Birmingham selling cocoa and chocolate. Since then we have expanded our business throughout the world by a programme of organic and acquisition led growth. The separation of our confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the world's BIGGEST and BEST confectionery company. A few facts and figures •

We make and sell three kinds of confectionery: chocolate, gum and candy

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We operate in over 60 countries

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John Cadbury opened for business in 1824 - making us nearly 200 years young

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We work with around 35,000 direct and indirect suppliers

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We employ around 50,000 people

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Every day millions of people around the world enjoy our brands Heritage Almost 200 years young with a heritage tracing right back to 1824. It's a fascinating story of industrial and social development - the story of a small family business growing up, and joining with others, to become an international world leader. A story of technical invention and secret recipes, marketing savvy and the creation of great brands. A story of people who are passionate, principled, pioneering and just love confectionery. The Cadbury family tradition It was John Cadbury, a young Quaker, who first set things in motion when he opened a shop in Birmingham, UK in 1824. His original focus was the trade of tea and coffee, but he soon spotted a new opportunity in cocoa beverages and laid the foundations for Cadbury's move into chocolate and then confectionery. Cadbury's was a business founded on strong values and a sense of social responsibility. As Quakers, the Cadbury family believed tea, coffee and cocoa beverages could serve as an alternative to alcohol, seen to be a cause of poverty and deprivation amongst the working classes. More broadly, they were active across other Quaker campaigns for 'justice, equality and social reform, putting an end to poverty and deprivation.' For example, Cadbury were involved in the early anti-slavery movement, calls for better housing and sanitation, and inner city smoke abatement.

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Across the UK society, Quakers were excluded from universities (which were closely tied to the established church) and therefore entry into the professions. They were also unwilling to enter the military due to their pacifist principles, so turned their energies and talents towards business and social reform. So starting with cocoa, hand-ground with a mortar and pestle in the back room of his shop, John Cadbury laid the foundations of today’s Cadbury. Cadbury plc In 2007, the decision was made to separate the Beverage and Confectionery businesses. The demerger of the Americas Beverages Business on 7 May 2008 marked the beginning of a new era for Cadbury plc with its vision to be the world’s BIGGEST and BEST confectionery company. Today, Cadbury continues to operate with a deep rooted belief that doing well is good for business.

The chocolate industry Candy Industry publishes an annual list of the top 100 global confectionery companies, ranking them by total sales. The table below is an extract from this list giving the top ten global confectionery companies that manufacture some form of chocolate by total confectionery sales value in 2008.

Company Mars Inc CadburySchweppes PLC Nestlé SA Ferrero SpA Hershey Foods Corp. Kraft Foods Inc.

Total sales US$ millions 9,546 8,126 7,973 5,580 4,881 2,250

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Meiji Seika Kaisha Ltd. Lindt & Sprüngli Barry Callebaut AG Ezaki Glico Co

1,693 1,673 1,427 1,239

Fair Trade cocoa and chocolate Fair Trade is a trading partnership, based on dialogue, transparency and respect that seek greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing their rights of, disadvantaged producers and workers especially in the South. Fair Trade certified producer organizations must comply with a number of requirements, related to social, economic and environmental developments. In addition, labour conditions in these organizations must follow certain standards. The essential characteristic of Fair Trade cocoa is that producer organizations receive a higher price for their cocoa beans. The Fair Trade price represents the necessary condition for the producer organizations to have the financial ability to fulfill the above requirements, and to cover the certification fees. It is calculated on the basis of world market prices, plus fair trade premiums. The Fair Trade premium for standard quality cocoa is US$ 150 per tone. The minimum price for Fair Trade standard quality cocoa, including the premium, is US$ 1,750 per tone. Other benefits for certified producer organizations are better "capacity-building" and "market access". Presently, cocoa sold with the Fair Trade label still captures a very low share of the cocoa market (0.1%). Organic cocoa and chocolate The organic cocoa market represents a very small share of the total cocoa market, estimated at less than 0.5% of total production. ICCO estimates production of certified organic cocoa at 15,500 tones, sourced from the following countries: Madagascar, Tanzania, Uganda, Belize, Bolivia, Brazil, Costa Rica, Dominican Republic, El Salvador, Mexico, Nicaragua, Panama, Peru, Venezuela, Fiji, India, Sri Lanka and Vanuatu. However, the demand for organic cocoa products is growing at a very strong pace, as consumers are increasingly concerned about the safety of their food supply along with other environmental issues. According to Euro monitor International, global organic chocolate sales Page 5

were estimated to have increased from a value of US$ 171 million in 2002 to US$ 304 million in 2005. Certified organic cocoa producers must comply with all requirements associated with the legislation of importing countries on production of organic products. The benefit for cocoa farmers is that organic cocoa commands a higher price than conventional cocoa, usually ranging from US$ 100 to US$ 300 per tone. However, originating countries with smaller volumes can fetch much higher premiums. This premium should cover both the cost of fulfilling organic cocoa production requirements and certification fees paid to certification bodies. Some of the organizations involved in Fair Trade and organic movements •

The Fair-trade Labeling Organization (FLO)

FLO, established in 1997, is the worldwide Fair Trade standard-setting and certification organization. Since 2004, it has been composed of two independent bodies, FLO-I for standard-setting and FLO-Cert Ltd. for Fair Trade certification and auditing activities. The FLO membership consists of the 19 National Initiatives located across Europe, North America, Mexico and Australia/New Zealand. FLO certified cocoa producer associations are located in Belize, Bolivia, Costa Rica, Dominican Republic, Ecuador, Haiti, Nicaragua, Panama, Peru, Cameroon, Ghana and Côte d'Ivoire. •

The Max Havelaar Foundation

The Max Havelaar Foundation guarantees small farmers in developing countries a fair price for their produce and intermediates in marketing products, which then bear the Max Havelaar hallmark. Max Havelaar cocoa was launched in October 1993. •

The International Federation of Organic Agriculture Movements (IFOAM)

IFOAM, an umbrella organization for the participants in the organic market, defined and adopted in 2005 revised principles of organic agriculture and is now in the process of establishing a definition of organic agriculture, which is expected to be adopted in 2008. Some of the manufacturers of organic chocolate are: Green & Black's, a UK company, which uses organic cocoa from a village in Belize to make its chocolate bars. Rapunzel chocolate, made in the USA and using organic cocoa from the El Ceibo cooperative in Bolivia.

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Global Marketing environment We are proud of our brands. They provide fun and enjoyment as treats or refreshment, and are Valued for their functional benefits. They can be enjoyed as part of a balanced diet and lifestyle. We provide choice by offering variety and through innovation. We encourage responsible consumption, as this is central to consumers continuing to enjoy our brands. Our consumers are at the heart of our business. We are committed to listening to them and acting responsibly in their interests and have done this successfully for generations. This Marketing Code of Practice ensures we continue to meet our responsibilities to our consumers. 1. Accurate and truthful •

All our advertising will be truthful, accurate and well substantiated

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Copy, sound and visual presentation will accurately represent all material dimensions of products advertised, including taste, size, content and nutrition and health benefits

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H  ealth benefit claims will have a sound nutritional basis and comply with applicable government regulations.

2. Attentive to local sensitivities •

In every country where we advertise we will be attentive to local, cultural, political and religious sensitivities and always market within the highest common denominator of any existing regulatory, advertiser, agency and broadcaster guidelines.

3. Supporting sensible consumption and balanced life style •

Our advertising will reflect moderation in consumption and portion sizes appropriate to the social and cultural setting portrayed.

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Our advertising will never portray or endorse inappropriate or over consumption.

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Unless a food product has been nutritionally designed as a meal replacement, it will not be portrayed as such.

4. Protecting children Page 7

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We will always take into account the level of knowledge, sophistication and maturity of the people we are advertising to. Younger children have a limited capacity for evaluating the credibility of information they receive. They also may lack the ability to understand the nature of the personal information they disclose on the Internet.

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We recognize and will act on the special responsibility we have to protect children from their own vulnerabilities.

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We will comply with any higher or additional standards imposed by applicable local regulation.

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We will not advertise where children under the age of 8 years are likely to be the majority of the audience. This is generally accepted as the age at which children start being able to comprehend what an advertisement is seeking to achieve and to make judgments accordingly.

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We will exercise special care when advertising to children below the age of 12 in order to: 1. Support the role of parents: Our advertising will support the role of parents and other appropriate adult role models in guiding and deciding what children should eat and drink. We will not use visuals, language or messages that encourage children to pester parents or others to buy products. 2. Uphold responsible consumption and nutrition: Our products will be represented in a way to encourage the sound use of the product, with a view towards proper nutritional development of the child and development of good nutritional practices. 3. Promote positive values and social behavior: We will, where appropriate, capitalize on the potential of advertising to influence behavior by developing advertising the supports positive and beneficial social behavior including sensible consumption, friendship, kindness, justice, honesty, generosity and respect of others, and in so doing expose children to the benefits of constructive advertising approaches. 4. Respect the distinction between editorial content and commercial promotion: We will not advertise during or adjacent to a programme if the content of our advertisement Page 8

is derived from or associated with that programme. For example, we will not use broadcast or print media personalities (live or animated) to sell products, premiums or services in a way that obscures the distinction between programme or editorial content and commercial promotion. Commercials and advertisements featuring characters from programmes or publications primarily directed to children should to be adjacent to programmes or articles in which the same personality or character appears. 5. Take care when using fantasy, celebrities or characters: We will take great care when using any forms of fantasy, including animation, not to exploit a child’s imagination in a way that can encourage poor dietary habits or less than sensible consumption. When using fictitious or real characters to promote our products, which are in the treat and occasional consumption range, we will not use such characters to promote inappropriate consumption. 6. Represent benefits, promotions and prizes responsibly: Our advertising will not misrepresent the potential benefits from the consumption of a product such as status or popularity with peers, sporting success or intelligence. We will use language and visuals that are clearly understandable in advertising and promotions, especially where it relates to the likelihood of winning a prize or being included in a club of any kind. 7. Avoid a sense of urgency or price minimization 8. Take care when showing children under eight: We will only show children undereight years in advertisements and promotions where they are under the supervision of a parent / guardian figure affirming responsible and monitored consumption. We will not have any visual reference of children under-eight years on company-owned vending equipment. 9. Exercise additional care in relation to websites and interactive media: Where we have websites with children’s content, we will not knowingly link to pages of other sites that do not comply with our standards. We will not seek to gain the address or other personal details of the child, we will not e-mail children and we will comply with any Page 9

higher or additional standards imposed by applicable local law. We will use this area of any website we have to remind and encourage parents to check and monitor their children’s use of online activities regularly. Under limited circumstances of safety, security, liability and other purposes permitted under applicable law, when contacted by a child, we will use the personal information they provide to attempt to notify and obtain consent from the parent/guardian and will not further use such information for marketing to such children. Our internet, interactive or web based marketing communication will clearly distinguish any material intended only for adults, through access mechanisms that are age limited, as defined by applicable local standards or regulation.

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Global cultures & buyer behavior The performance driven across the glob like Americas, Britain, and Ire lend Middle East, Africa, Europe & Asia Pacific, values led. Throughout changing times, our constant values have inspired us to be pioneers in business and in corporate responsibility. They help ensure we are proud of our company and are critical to our core purpose of creating brands people love. Our values are: •

Performance We are passionate about winning. We compete in a tough but fair way. We are ambitious, hardworking and make the most of our abilities. We are prepared to take risks and act with speed.

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Quality We put quality and safety at the heart of all of our activities - our products, our people, our partnerships and our performance.

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Respect We genuinely care for our business and our colleagues. We listen, understand and respond. We are open, friendly and welcoming. We embrace new ideas and diverse customs and cultures.

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Integrity We always strive to do the right thing. Honesty, openness and being straightforward characterize the way we do business. We have clear principles and do what we say we will do.

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Responsibility We take accountability for our social, economic and environmental impact. In this way we aim to make our business, our partners and our communities better for the future. Our Business Principles are our code of conduct and also take account of global and local cultural and legal standards. They confirm our commitment to the highest standards of ethics and business conduct. Core purpose and vision section: Core purpose: Our core

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purpose is creating brands people love. The core purpose captures the spirit of what we are trying to achieve as a business.

Consumer Trends across the glob

Good business and good values go hand-in-hand at Cadbury. Always have done and always will do. We approach consumer trends with a commitment to put actions before words and to respect and protect the long history of trust we have with our consumers. •

Listening to consumers

Listening to customers and consumers is fundamental to our business success - it's something we do every day and it helps us to offer products that are safe, delicious and enjoyable. We talk to our customers - the people who sell our products to the people who consume them - to better understand consumer trends. We also deal directly with consumers and have substantial resources at the business unit level to listen and respond to consumer queries and complaints. •

Responding to consumer needs

The issues of food and balanced diets are now high on the consumer agenda, along with product quality and safety. We use our intuition and consumer insights to understand consumer needs and issues and we demonstrate our responsibility by taking appropriate action to ensure we create tomorrow's business today. We will continue to give consumers the great tasting products they love in a variety of different formats, recipes and sizes. Research plays a large role in our innovation agenda, exploring opportunities for new products, product enhancement and packaging and we're always checking that our recipes and ingredients are right for today's consumer.

Market entry strategies Page 12

Strategy The Cadbury believe that the business still has significant untapped potential-both in terms of top line growth and returns. By exploiting the strength of our leadership positions to continue to grow our market share and significantly increase our margins and returns, we aim to achieve our vision of becoming the biggest and best confectionery company in the world. Our Vision into Action (VIA) plan for 2008 to 2011 aligns the energies and efforts of our teams around the world behind a number of priorities which will make the most impact on our revenue and margin performance. In order to generate superior returns for our shareowners, our VIA will deliver six financial targets. These are set out in our financial performance scorecard below: •

Organic revenue growth of 4% - 6% every year

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Total confectionery share gain

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Mid-teens trading margins by 2011

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Strong dividend growth

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An efficient balance sheet Growth in Return on Invested Capital (ROIC) To achieve these financial goals, we have a growth and efficiency strategy which aligns behind our focus on fewer, faster, bigger and better. This focus is being applied to all aspects of our business. 1. Relentless Focus on Cost and Efficiency We recognize that we can be much more profitable by simplifying the way we do things across all aspects of our business. Because we had become a complex business, our total cost base is higher and our margins are currently below our peer group average. Our goal of increasing our underlying operating margins from around 10% in 2007 to mid-teens by end of 2011 has three core elements:

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A major group-wide cost and efficiency programme across all aspects of our business - in sales and administration, in the supply chain, in the regions and at the group centre. We are aiming to reduce the complexity in our business and minimize duplicated activities; Page 13

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Improving the performance in three key underperforming emerging markets – Russia, China and Nigeria; and

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Focusing relentlessly on profitable growth and where necessary, rationalizing our portfolio. Examples of the ways in which we are simplifying our business to reduce costs include:

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Managing our chocolate, candy and gum categories and biggest brands on a global basis rather than on an individual market or region basis.

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Combining local market and regional head offices, including in the UK where we are co-locating our central head office team with the BIMA (Britain, Ireland, Middle East & Africa) management team in a single office;

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Combining or clustering a number of markets into a single commercial organization with greater scale and lower overall costs such as Canada and the USA;

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Outsourcing certain financing, accounting, IT and human resource processes to specialist third party operators; and

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Reconfiguring our manufacturing network, so that more of our production is focused in a fewer number of large scale plants. This will allow us to reduce costs and invest in new state of the art factories to support our growth agenda. 2. Disciplined Investment Hand in hand with our focus on strong growth and higher margins, is an even greater discipline on how we spend our money. We aim to improve the returns from each £ or $ of capital invested in our business while at the same time ensuring that we invest appropriately in the business for the longer-term. Our focus on fewer and bigger projects requires us to be more disciplined in how we allocate our resources across brands, markets and projects - choosing where to invest and at times where not to invest, or deciding when we should invest on our own and when it would be better to invest along-side a partner. In 2007, for example, we extended our partnership with Barry Callebaut, the world’s largest cocoa processing company, to co-invest at our growing chocolate production facility in Poland. 3. Driving Superior Returns

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To deliver superior returns for our shareowners, and justify continued investment in new plant and equipment or in buying new businesses, we must generate returns significantly above the cost of capital. Thus our financial scorecard calls for the combination of: •

Strong dividend growth;

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An efficient balance sheet; and

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Consistent improvements in ROIC. 4. Aligning Management Incentives Our new management incentives for 2008–2011 are closely aligned with the achievement of the financial performance scorecard. Our annual incentive plans require a balanced delivery of topline growth and margins, and the Long Term Incentive Plan requires a balanced delivery of earnings growth and improvement in ROIC. We are also continuing to focus aggressively on how we manage our working capital. Over the last four years, we have reduced or working capital days by over 10%, effectively releasing over £200 million of cash. During the next few years, the reduction in our manufacturing sites, the rationalization of our portfolio and external partnerships will allow us to reduce our working capital further. Our Priorities We have a clear business plan called our Vision into Action (VIA). This aligns the energies and efforts of our teams behind the brands, markets and projects that will make the most impact on our revenue, our margin, and our market performance. The organize across three priorities:

1 Growth: Fewer, faster, bigger, better Using our size, focus and sustainable approach to create brands which are consumer favorites. Building strong partnerships with retailers, so we grow profitably across chocolate, gum and candy. 2 Efficiency: Relentless focus on price, cost and efficiency Simplifying our organization to reduce costs and increase speed and our ability to compete. Managing our use of financial and natural resources to increase profit margins and improve our environmental impact. Page 15

3 Capability: Ensure world-class quality Developing world-class skills, processes and ways of working. Motivating our people and reward winning performance. They are underpinned by our Sustainability Commitments which have been carefully selected to both improve our business and our impact on the wider world. Our Sustainability Commitments We see corporate social responsibility and sustainability as key to our future success - helping us create a world in which we can grow and thrive. We have identified six commitments to ensure we grow in a responsible and sustainable way for the long-term. Our commitments: •

Promoting responsible consumption through thoughtful marketing, product innovation and better nutritional labeling

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Ensuring ethical and sustainable sourcing including the Cadbury Cocoa Partnership to support farmers and their communities

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Prioritizing quality and safety

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Cutting carbon, packaging and water use as part of our Purple Goes Green campaign

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Nurturing and rewarding colleagues, and embracing diversity

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Investing in communities - our money, our time, our capability As well as being the right thing to do, they also create value and competitive advantage, helping to strengthen our business, build our reputation, and motivate our people.

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Product & branding strategies Branding strategies: Cadbury Bourn vita 5 star

Cadburys Bourn vita was launched in the year 1948 that continuously reinventing it till date in terms of product, packages, promotion and distribution. The communication of the brand also changes according to the changing customers and their preferences. During 1970s, "Goodness that grows with you" was the campaign which focused upon “good upbringing”. In 1980s, "Brought up right, Bourn vita bright" campaign was used. During 1990s all the brands in the category, concentrated upon physical benefits, whereas Bourn vita focuses upon both physical and mental benefits. 'Real Achievers who have grown up on Bourn vita' was one of the successful campaigns. Page 17

As a consumer of the product, children will be expecting more taste and as a customer, mothers will give importance to the nourishment. In order to fulfill the desires, Cadburys had found a new way of branding strategy. The idea is combining the two most powerful brands of the company, five star and Bourn vita. This will further enhance the strength of both the brands, in terms of taste and energy. These two brands will be grabbing a distinct place in the mind of the customers. This new variant of Bourn vita 5 Star is positioned as a unique magical treat that offers the goodness of malt food drink and exciting caramelized taste. This is one of the new marketing strategies used to boost the presence of brand. Dairy milk is also a good brand from Cadburys. Then why they didn’t use that brand. They would have associated dairy milk, like “Bourn vita dairy milk” by saying enrichment of the milk. By doing this, they would have got triple advantage, the brand value of two brands and the milk shakti. I think 5 star brand name is more catchier, so they decided to do so. Do you know any other brands did like this before….?

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Global communication strategies Functions The changes described in the Our Business section do not alter the general responsibilities of the functions except for the strengthened categories which will have wider responsibility to develop commercial strategy and influence local execution. Supply Chain team Our Supply Chain function ensures the reliable supply of products, whether manufactured by the Group or by a third party. Supply Chain’s role encompasses sourcing of ingredients and packaging materials, planning, manufacturing, distribution and customer services, as well as quality and safety of products, and employee safety. Supply Chain is responsible for managing the fixed assets of the Group’s manufacturing facilities and warehouses. Commercial and Category team Our Commercial function, including the three category teams of chocolate, gum and candy, helps facilitate higher revenue growth from the business units than they could otherwise achieve on a stand-alone basis, and to achieve this more efficiently, by leveraging the skills and experiences of the wider global team. Commercial defines our category and portfolio strategy; ensures the Group has best-in-class commercial capabilities; partners with other functions such as Science & Technology and Supply Chain in creating innovation; and co-ordinates brand management, consumer insights and global customer strategy. Science and Technology team

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The Science & Technology team sets and communicates global technical priorities, establishes and co-ordinates the science agenda and facilitates global knowledge management and bestpractice transfer. It prioritizes and funds technology developments which underpin our innovation agenda, including longer-term globally-applicable development programmes. It also co-ordinates nutrition initiatives as a key element of the Group’s food policy and, together with Group Legal, create a strategy for the Group’s intellectual property assets. Human Resources and Corporate Affairs teams The role of the Human Resources function is to improve performance by enhancing the effectiveness of day-to-day working practices, strengthening our people capabilities and developing the quality of their output. Human Resources supports the business in delivering its goals by putting in place the right people for the right job; by helping develop and support the most effective organizational strategies and structures; and by attracting, retaining and developing employees and rewarding the right behaviours and performance. A widely communicated People Strategy sets out our approach to developing people within Cadbury. Our Corporate Affairs, activities include Corporate Communications, Public Affairs and CSR. Finance and IT team Finance & IT are focused on developing a strong business partnership with the commercial operators in the Group, while maintaining a robust financial control environment. The function sets low cost, IT-enabled common internal processes and standards for financial reporting and control, and ensures high quality external reporting which complies with all applicable laws and regulations. It is responsible for setting the Group’s annual contracts (or budgets). It is also responsible for managing financial communications and the Group’s relationship with the investment community. Legal and Secretariat team Legal and Secretariat partners and supports the regions and other functions by taking responsibility for a broad range of legal and secretarial activities. These include corporate governance matters; compliance with US and UK securities regulation and legislation; effective management of the Group intellectual property portfolio; mergers and acquisitions; litigation management; general contract work and incident management. Strategy team The team focuses on the effective development, approval and communication of a clear strategy to deliver growth and efficiency as set out in our Performance Scorecard, and ensures that our Page 20

strategy is supported by appropriate capabilities. The Strategy team also supports the CEC in making resource allocation choices that are aligned with our priorities. Potential acquisitions and disposals across the Group are managed by the team. Cadbury Cocoa Partnership

In January 2008, the Cadbury Cocoa Partnership was established in partnership with the United National Development Programme, local governments, farmers and communities. This ground-breaking partnership aims to secure the economic, social and environmental sustainability of around a million cocoa farmers and their communities in Ghana, India, Indonesia and the Caribbean. Over ten years £45 million GBP will be invested through the partnership to improve farmer incomes, develop communities and build partnerships. In January 2009 Cadbury announced that the Cadbury Cocoa Partnership was now active across 100 Ghanaian communities, marking the 100th anniversary of cocoa trading with Ghana. 1. Fair-trade Building upon our existing Cadbury Cocoa Partnership commitments to Ghana, Cadbury and the Fair-trade Foundation announced plans to achieve Fair-trade certification for Cadbury Dairy Milk by late summer 2009, in the UK and Ireland. This groundbreaking move will result in the tripling of sales of cocoa under Fair-trade terms for cocoa farmers in Ghana, increasing Fair-trade cocoa sales for existing certified farming groups, and opening up new opportunities for thousands more farmers to benefit from the Fair-trade system. 2. The Cadbury Cocoa Partnership - one year on The Cadbury Cocoa Partnership’s first year has seen a Ghana Board set up to oversee the programme

including

representatives

from

Ghanaian

organizations and development specialists. Page 21

government

ministries,

farmer

Cadbury Chief Executive Todd Stitzer visited Ghana to mark the anniversary of the Cadbury Cocoa Partnership and the centenary of our first cocoa shipment from Ghana in January 2009, to see for himself the work now underway across the 100 communities. The 100 communities who have now joined the partnership have been identifying their main development needs, including the construction of new school buildings or forming Cocoa Youth Clubs to encourage the next generation to remain with agriculture, particularly cocoa farming. 3. What’s next? In 2009 the Cadbury Cocoa Partnership is extending its activities to focus on improving farm income levels by developing farmer education programmes that explore best cocoa management practices leading to high quality and increased yields. As well as seeking to make an immediate impact on farmers’ lives, the Cadbury Cocoa Partnership is exploring carbon reduction techniques to secure more sustainable cocoa farming. By 2018, Cadbury estimates it will have made a demonstrable difference to the lives of around half a million Ghanaian farmers.

Supply chain & distribution The Transport Department and Railhead Depots Around 1918, a new Transport Department was set up at Cadbury, headed up by George Jnr. At this control centre they knew what was going on at all other Cadbury sites – how many canal Page 22

boats were being loaded and unloaded at the port, what material might be en route by rail, road and canal. And this crucial information kept the business running smoothly. George decided to set up a network of railhead distribution depots around the country, which could be serviced by full trainloads of goods from Bourneville. The first railhead was set up in London by 1921. In 1924 there was a special train for Easter Eggs – it was reported in the Transport Committee Minutes that: ‘The Committee agreed for special arrangements to be made for deliveries to Health Resorts by Passenger Train for a few days prior to Easter, in order that customers can have goods in stock to meet requirements…this arrangement will only apply to chocolate orders’ It’s nice to know that chocolate lovers of 1924 got their Easter eggs on time! By 1930 there were fourteen depots in the UK and Ireland, and a fleet of over 60 Cadbury vans who delivered orders from them. The result was the freeing up of much-needed space at Bourneville for seasonal stock, cheaper bulk rates negotiated with the railways, and less money spent on packaging. This was another innovation that transformed the business and allowed Cadbury to beat its competitors in terms of price and value for money. Cadbury passed on these substantial savings to its customers, meaning for several years their prices dropped year on year – for instance the price of Cadbury Dairy Milk dropped an extraordinary 70% between 1920 and 1934! From steam and canal boats to Today’s Road Transport The very last steam loco to be bought by Cadbury was taken into stock in September 1955. Built by Peckett & Son of Bristol it ran on coke (a form of baked coal) minimizing smoke pollution. The other locos were also converted to this more environmentally friendly fuel during the 1950s. But steam’s days were numbered. In 1958 the first diesel engine arrived. Steam locos stopped running in 1963, as did delivery of goods by canal. Diesel replaced the steam locos, but these lasted only ten years, because road transport had gradually been becoming more and more important, as the roads improved and costs came down. By 1976 rail was transporting under 10% of Cadbury’s traffic, so the entire rail system was shut down – it was the end of an era. On the road For some years Cadbury received raw materials and delivered their products by road from an enormous computerized distribution depot next to the M5 at Old bury, supported by fourteen other warehouses. Cadbury ran its own fleet of 60 vehicles, backed up by 63 different road haulage companies. But in recent years things have changed. Page 23

In 1993 Cadbury moved their main warehouse out of Old bury to a custom-made state-of-the-art building in Minford, Sutton Cold field. There are just two more warehouses, one in the southeast, and one in the northwest. And the company outsources all its haulage and deliveries to just five suppliers. So why the big change? It’s to do with two things: efficiency and the environment. Greener transport for the 21st Century In recent years Cadbury’s transport and warehousing arrangements have undergone something of a revolution. Gone is the in-house fleet of vehicles, the many warehouses, and the 63 haulage suppliers. In its place is a new, streamlined system, which is better for the environment, and saves money too. The company is leading the way in their approach to modern transport issues, particularly when it comes to environmental concerns. In terms of transport, food miles – the distance food travels between its production and you eating it – is one of the big issues for modern companies. Since Cadbury outsourced its haulage and distribution to just five suppliers, the Company has achieved a reduction of 2.5 million food miles per year as well as saving 15% on cost, and the fewer the food miles, the smaller the environmental impact. Cadbury is also working with major customers to share haulage, again with a view to reducing food miles. Obviously when you deliver goods somewhere, there’s a chance that the lorry might have to return empty, and Cadbury is also bringing down the percentage of ‘empty running’ below its current level of 25% (against an industry norm of 30%). And there’s more good news: 7,500 tones of CO2 has been saved, half from reduced lorry movements between warehouses. Cadbury is also doing simple things like encouraging everyone within the business to use video and teleconferencing where possible, rather than travelling around. In fact from energy consumption to waste management, every area of transport is being monitored. Warehousing Cadbury has been working with the Food & Drink Federation, an industry body, and The Carbon Trust, a government agency, to cut carbon emissions associated with warehousing. So what changes have been made? Cadbury’s three modern warehouses are buildings designed for the purpose. Energy consumption is monitored, waste is recycled and heat sensitive lights at two sites means electricity is not wasted when there’s no one around. The Milton Keynes warehouse even runs on green electricity. Page 24

Cadbury’s warehouse at Minworth, near Sutton Cold field, is Europe’s largest chilled warehouse. But the chillers don’t have to be on all the time – monitoring showed that the temperature could be kept down by running the chillers only at night, when energy is cheaper. In fact 40% has been saved in warehouse energy bills. The full environmental audit undertaken at Minworth will be a blueprint for all sites. The Future Cadbury’s main goal for the years to come is to reduce its carbon footprint still further, and the company is looking at hundreds of individual measures to do just that. In transport and warehousing these include increased monitoring of energy use and outside suppliers, better vehicle and engine design, larger vehicles, more green targets for all transport and warehousing providers, and more sharing of transport and warehousing. It’s possible that other modes of transport will be looked at – who knows, there could be a return to the use of the canals and railway network. But whatever the future holds, Cadbury’s commitment to environmental efficiency will remain a cornerstone of the business.

Pricing strategies Its latest annual report states: `Cadbury is all set to satisfy untapped potential. With brand launches, re-launches and new products, the thrust is on reaching every individual, satisfying different palates and being within varying budgets. Basing its operations on this vision, Cadbury is charting a new course of action. With the product, place, price and promotion synergies working in tandem, it won't be long before we find a Cadbury in every pocket.' The price points in the wafer chocolate category were redefined by Nestle when it launched Munch at Rs 5 last year. Cadbury had to react to this lowering of price within the wafer chocolates category and had to stretch Perk to Perk Slims at Rs 5 to counter it. For Cadbury, Perk is basically a fighter brand being used to flank the mother brand. In fact, the fight is almost similar to what HLL did with Wheel (though it was not making money on the brand) to counter Nirma in the detergent market while Surf sat pre try as the mother brand in Lever's portfolio.

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Cadbury is targeting a 12 per cent volume share for the Perk brand after this relaunch and expects to overhaul Kit Kat. As Bharat Puri, Director (Sales & Marketing), Cadbury India, declares: ``our objective is to be the largest wafer-coated brand in the country.'' A new campaign has been developed for the relaunch of the brand where through three commercials the differences in the new Perk are highlighted through dialogues alluding to match-fixing -- Khule Aam Khayiye. Kabhi Bhi. Kahin Bhi. Explains Piyush Pandey, National Creative Director, Ogilvy & Mather, ``Through the commercials we are trying to bring out various explanations about the changes in Perk.'' The original campaign of Thodi Si Pet Pooja, Kabhi Bhi, Kahin Bhi will continue th rough another new commercial, of a lady secretly eating Perk on the occasion of Karwa Chauth. Meanwhile, another wafer chocolate brand that has been targeting kids is Milk Treat, four wafers with butterscotch-flavoured cream embedded in milky white chocolate. Though Cadbury did have a white bar, Creamy Bar, it was never treated as a major brand. Milk Treat is pitted against Nestle's Milky Bar though it is in a moulded form unlike the former which is in count form. There are expected to be more variants under the Milk Treat brand for children. Both Milk Treat and Perk are priced on par at Rs 10 f or 27 gm. Despite all the action in the chocolate wafer segment, growth for Cadbury has always come from its mother brand - the Rs 117-crore Cadbury's Dairy Milk which today straddles all possible price points. In 1999, Cadbury recorded an eight per cent turnover growth in chocolate confectionery led by its flagship brand Cadbury's Dairy Milk, which registered a growth of over 40 per cent. The malted food drinks category reported a growth of 14 per cent while t he sugar confectionery segment raised a mere three per cent. The Eclairs brand grew by a healthy 14 per cent. In fact, Cadbury has consciously stayed away from meddling too much with its heritage chocolate brands -- Dairy Milk and 5 Star. Explains Puri, ``As a marketer, it is best not to do too much to these heritage brands which already have strong equity. Not that we will never relaunch them but right now they enjoy a strong equity.'' But, it did relaunch its heritage brand of malted drinks, Bournvita, last year when it lost share to the white drinks segment. There are plans to extend this strong brand in the future, about which Cadbury does not want to reveal its plans right now. I nterestingly, there already exists a similar sounding dark chocolate brand for adults, Bourneville, in its kitty for many years, which has not seen much advertising. Page 26

While its chocolate brands are continuing to get broadbased, its sugar confectionery brands will get upgraded to higher price points. For instance, its hard-boiled sweets such as Googly, Mocka and English Toffee are gradually being phased out, while the new brands such as Frutus, a chewy sweet (Re 1) and the jelly, Gollups (Rs 2), are expected to see some healthy growth. Adds Puri, ``It is not possible to build brands at such low price points. While there are volumes, the margins are thin in this category.'' Besides, the latest Budget has hiked the duties of sugar confectionery products from eight per cent to 16 per cent, which in any case has led to an increase in prices and thereby affected brands such as Googly. But one thing that Cadbury has realized through all this is that it has got cheaper with more products in the Rs 3-5 category. Its premium brands such as Cadbury Gold, Truffle and even Picnic have never really been accepted in the chocolate market. Today, Cadbury is constantly looking at pushing volumes at the lower end of the market and brands such as Relish, Break, 5 Star and Dairy Milk have Rs 5 variants catering to this lowest price point. Perk Slims is the latest Rs 5 brand to be added to this list. As for taking the chocolate wafer war to the enemy camp, it might take a while because Nestle also has deep pockets and has established itself in the chocolate wafer category in spite of dipping shares. However, Cadbury will always be the leader with its heritage brands. As Rajat Sabharwal, an analyst with Kotak Securities states, ``Nestle may be a key player in the Indian chocolate market but there is no possibility of it emerging as a category leader.''

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SWOT analysis SWOT Analysis

Strengths: •

Strong brand names like Cadbury Dairy Milk, Five star and Éclairs.

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Rich product mix.

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Support from the parent Cadbury Schweppes.

Weaknesses: •

Lack of launch of new brands in Chocolates segment.

Opportunities: •

The Indian market and more specifically the urban areas where the penetration of Chocolates is low can be developed as a future market through affordability and availability.

•

Using information and technology to bring efficiency in logistics and distribution.

Threats: •

Stiff competition in Confectionery segment.

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The company has large exposure to foreign currency exchange rate risk, mainly on account of imported cocoa beans and cocoa butter in US Dollar and Pound Sterling.

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Finding Set up operation all over the world it’s not easy but very difficult, the company like Cadbury done well across the world its very talented and hard work job. I also find the brand name of the Cadbury is very well known across the world as compare to the other brand name such a nestle etc. Also I found Cadbury Company has strong corporate governance, as well the contribution of social responsibility is very high as compare to other company. Here is some example of the Cadbury corporate social responsibility which is major focus on following factors: •

Marketing, food and consumer issues

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Ethical sourcing and procurement

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Environment, health and safety

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Human Rights and Employment Standards

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Community investment

As well I found the Cadbury purchase raw material COCOA for chocolate bar is sourced from Ghana. The companies buy COCOA from the Ghanaian government cocoa board (COCOABOD), which controls the cocoa trade in Ghana. If, the company not maintain long term relation with government of Ghana its may be possible the company can not survive long time in future. Many things which I found the Cadbury very strong in terms of brand name and market share across the world. As well as company is maintaining relations very hearty with customer, supplier, stakeholder and employee. Also I found the Cadbury never negotiate with quality of product because of the philosophy of the Cadbury is to serve high-quality product to the customer. As well as not only in quality but Page 29

also very ethical in the pricing of the product which are focus & considered on country wise peoples incomes.

Recommendation

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Should be made available product everywhere.

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Approach to the rural area.

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Create a new product to push the sales.

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Chocolate drink may entry in this market.

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Company should concentrate more on television for advertisement, as mostly people get attracted through television only.

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The company should held seminars and meeting for the promotion activities.

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The Cadbury Company requires ideas on the development of a new chocolate bar. It must utilize the flavours and styles of existing Cadbury's chocolate bars but capture a currently untapped or unfulfilled market segment.

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Bibliography

www.cadbury.com www.cadburyindia.com www.cadbury.co.uk www.cadburyschweppes.com www.google.com Book: Global Marketing Management (Kiefer Lee & Steve Carter)

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