Cadbury’s Marketing Strategies

Executive summary

Cadbury’s Company operates in the confectionery industry and is the second-largest confectionery brand after the Mars Company in the UK. Over the last 4 years, the industry has been grappling with some challenges, including Brexit, price fluctuations, and the increasing number of companies dealing in similar products (unfair competition). For Cadbury to remain relevant in the market, the company needs to deal with these challenges as fast as possible. The move by Cadbury to expand their product portfolio has enabled the company to generate more revenues, but just how sustainable is the new company’s venture? Here we propose two significant objectives for the company to adopt moving forward to address the company’s shortcomings in revenue generation. Firstly, Cadbury should consider the issue of customer satisfaction as an urgent issue and move with speed to address it. Customer satisfaction can be solved from the perspective of the 7Ps by ensuring the availability of affordable products in a wider range at all the company’s shops/outlets. The provision of a wide variety of company products may also take the route of using different flavors to provided customers with a vast experience of company chocolates. Secondly, customer satisfaction is expected to automatically result in enhanced customer loyalty and a high number of returning customers. Upon implementation of these objectives, outcome measurement can be achieved through the quantification of the company’s vital performance indicators. For the maximum performance of the company’s marketing strategies, the above objectives should be implemented.

Introduction

Cadbury’s is a global company with its headquarters based in Uxbridge, west London. The company owns branches in more than 50 countries globally. Cadbury Company operates in the confectionery industry and is the second-largest confectionery brand after the Mars Company (Stastista, 2011). Cadbury specialized in Dairy milk chocolate, crème egg, and Roses selection box as the main product. The history of the company dates back to 1824 when the founder, John Cadbury, sold chocolate, tea, and coffee in Birmingham. According to Stastista, 2011, Cadbury and Mars held the largest market share in the confectionery industry (15%) each. The companies faced stiff competition from Nestle (13%), Hershey’s (7%), and Ferrore (7%) of the total market share (Devi, 2015) (Figure 1). In 2014, Mar; Cadbury’s largest competitor had a market share of 29.5% in the United States of America, beating other well-known brands such as M&M.

This paper evaluated Cadbury and its market strategy by analyzing both internal and external factors. The article provides a detailed marketing analysis of the company in the form of a marketing plan by performing situational analysis, objective suggestions, and strategies for implementing the objectives.implementation.

Stage one: Situational analysis

PESTLE analysis

Political The political atmosphere in the UK is a fundamental determinant of the performance of Cadbury (Mythily, 2015). For instance, the company’s performance was, to a large extent, affected by the transformation in the government from the labor party to the Democrat. This change in governance was reported to increase the number of people who were hired in different branches of the company to more than 3000 (Mythily, 2015).

Additionally, being a USA company, Cadbury may be required to forge a memorandum of understanding with the EU base on the outcome of the BREXIT to benefit both the US and the UK (Cheverton, 2004).

Economic ·       Cadbury did not report any reduction in sales despite the global monetary downturn. Moreover, the company successfully added 30% in its yearly income, mostly due to its dairy milk and Trident products (Cheverton, 2004).
Social ·       A significant social responsibility of Cadbury is defined in the original objective of its constitution. Being a company that was formed and managed by a quaker family, the company was resistance to alcohol, providing an excellent base for marketing and selling of non-alcoholic beverages, including cocoa, coffee, liquid chocolate, and tea. The company is committed to cultivating good morals in society (Sadgrove, 2016).
Technological ·       Adoption of technology in the packaging of Cadbury products changed the appearance of the products, and customers became more attracted to the products by enhancing customer impression. Additionally, the use of new breweries machines to merge coffee and cocoa led to blended drinks, that customers were attracted to (Cheverton, 2004).
Legal ·       In the UK, legal formation is defined at varying levels, including the local, regional, and national. The laws governing trade in the UK define the business transactions between Cadbury and other companies either in the UK or overseas. Therefore, Cadbury is obliged to carry out its business within the outlined business laws in the UK (Cheverton, 2004).
Environmental ·       Environmental concerns that affect Cadbury includes the use of energy and the possible release of harmful substance to the environment. For Cadbury, waste management is a significant milestone that the company has achieved following the adoption of waste management technology to adhere to the environmental conservation law in the UK. However, the company continues to struggle with the problem of greenhouse gas emission (Cheverton, 2004).

The PESTLE analysis has revealed two significant challenges that Cadbury faces, both in production (internal) and market stability (external). The problem of greenhouse gas emission has persisted for quite an extended period. Plans are, however, underway to ensure that the problem has been brought under control. On the other hand, the threat of Brexit remains a fundamental political issue that the company continues to face. In case Brexit happens, it is clear that the company will be required to enter into conversation with the UK as well as the USA government so that terms of business in both countries remain friendly to the company. This approach may, however, not be feasible considering the countries have different business policies governing their markets (Cheverton, 2004).

 

 SWOT analysis

Strength

·       Geat production and distribution channels

·       Popular products among customers

·       Customer loyalty among customers who use Cadbury’s products

·       Excellent promotion strategy (Helms and Nixon, 2010).

 

Weakness

·       Poor rural distribution

·       The products of Cadbury are highly-priced, and some customers may not afford to buy them

·       Some customers view Cadbury products as being processed food that may cause lifestyle diseases (Helms and Nixon, 2010).

Opportunities

·       Cadbury has the chance to explore expanding the rural market to increase its market share (Helms and Nixon, 2010).

·       Cadbury has opportunities to enhance the uptake of its chocolate products by introducing more tastes of the chocolates

·       Growing income level. As customers’ income increases, they tend to buy more providing opportunity for the company to sell more of their products

Strength/opportunities

·       Cadbury can use the strength of the popularity of its products to get its products into the rural market that the company has not yet explored

·       Cadbury’s excellent promotion strategy can be leveraged by the company to increase the clientele base, especially the customers with rising income (Helms and Nixon, 2010).

 

Weakness/opportunities

·       Despite Cadbury lacking proper distribution in the rural market, the company can take advantage of the increasing customer income to increase the urban market sales

·       Despite some customers avoiding chocolate due to the health impact, the company has the opportunity to enhance the uptake of chocolate by introducing different tastes

Threats

·       Potential high cost. The company products may increase shortly due to the gradually increasing cost of production

·       Health awareness and the health effects of Cadbury’s products. Some customers are aware of some of the health impact of chocolate and are avoiding consuming it

Strength/threats

·       The company’s strong production channel may be affected by the threat of increasing cost of production

 

Weakness/Threats

·       The weakness of the company’s products being heavily processed is complicated by the increasing health awareness about the health impact of chocolate (Helms and Nixon, 2010).

Cadbury provides a diversified portfolio of products, including dairy milk chocolate, crème eggs, and Roses selection. For the company to maintain its position in the market, it is essential to maintain all the products ahead in the market. For instance, in 2018, the company’s sales showed that powdered and liquid beverages were the most sold in 2018. On the other hand, water was the least sold product (Morland, 2009).

Figure 2: The 2018 sales of the product portfolio of Cadbury (Appelbaum, Batt and Clark, 2013)

Porters Five Forces

Porters Five Forces
The threat of New Entrants Weak The risk of new companies entering into the confectionery industry is not very significant considering that the current companies in this industry, including Cadbury, Ferrero, and Mars, have captured the market and established a strong clientele base (Parthasarathy, 2010).

Additionally,  new entrants into the market would face stiff competition and automatically be outstared.

Threat of substitutes Strong There is a significant threat of replacement of Cadbury’s products, especially the chocolate by the supermarkets, that package their chocolates. Currently, several supermarkets are on the go to produce and package their chocolates, which is copied from the original Cadbury brands (Parthasarathy, 2010).
Bargaining power of buyers Strong Cadbury’s have a massive buying power as they are a large and globally established brand. However, an incidence that occurred in 2006, where chocolates were recalled due to the evidence provided that they contained Salmonella affected the company’s buying power (Parthasarathy, 2010).
Supplier bargaining power Moderate Cadbury has established a strong positive association with suppliers of raw materials. Most of the documents required for the company are Agricultural produce that are fresh. The final product is, therefore, excellent and appealing to the consumers. It is therefore rational to say that Cadbury has a stronger bargaining power compared to its suppliers
Existing supplier rivalry Weak Cadbury remains to be a leading brand globally since mosy of the companies competing against Cadbury end up in competition against each other, thus being incompetent enough to fight against the global giant in the confectionery industry (Parthasarathy, 2010). Nestle, Hershey, and Ferrero compete against each other instead of teaming up to compete against Cadbury.

 

Despite the prices of Cadbury being slightly higher (the reason for customers) to switch to other brands offered by different companies, the buying power of Cadbury has remained a deterred. New entrants in the market have not been a common occurrence due to the high quality of Cadbury products attracting customer loyalty (Solomon et al., 2012). Strong customer loyalty has resulted in a stable customer base for Cadbury. New entrants will require a higher bargaining power to be able to establish a niche in the confection industry. Figure 3 shows the performance of different companies in the confectionary market (Parthasarathy, 2010).

Figure 3: Key players in the confectionery market (Jones, 1984)

STP of Cadbury’s

Segmentation

Segmentation of the market can be viewed as the subdivision of the entire market into various sub-categories of consumers bearing similar behaviors. A particular market strategy can, therefore, be used to reach each market segment. This technique is commonly used when there is a need to adjust the specific needs of every market subset. Segmentation has been shown to enhance branding, distribution, sales, and advertisement of the company products. Commonly used variables in market segmentation include geographic, demographic, psychographic, and behavioral (Satre, 2011).

 

 


Type of segmentation Segmentation criteria Cadbury target market
Geographic Region Products are exported to more than 55 countries
Density Urban/rural
Demographic Age All ages (1 year and above)
Gender Male and female
Psychographics Social classes Lower class

Working-class

Middle class

Upper class (Satre, 2011)

Lifestyle Reformer

Aspirer

explorer

Behavioral Loyalty Staunchly loyal, switchers, soft loyal
Personality Ambitious, determined
Status First time uses, non-user, regular user (Satre, 2011).

An example of market segmentation has been shown in figure 4.

 

:

Figure 4: An example of market segregation in Cadbury’s (Satre, 2011).

Cadbury positioning

A map showing the position of Cadbury in the market has been shown in figure 5.

Figure 5: Positioning map (Satre, 2011).

Compared to competitors in the market, Cadbury has a more variety of products. The wide variety of products available for Cadbury is in tandem with its vision and mission statement, which emphasizes the provision of a high-quality, comprehensive range of products to the customer for customer satisfaction. The range of products of Cadbury satisfies customer needs (Satre, 2011).

Stage 2: Objectives

Objectives identified for this analysis are aimed at ensuring that the company improves its performance. Furthermore, the goals were identified through the evaluation of the company’s performance indicators from the company’s 2019 annual report (Cadbury, 2019 annual report). Two objectives have been suggested in this case to help improve Cadbury’s performance

  1. Enhance customer satisfaction by using more attractive packaging materials as well as improving customer experience by providing a wider variety of chocolate tastes
  2. Customer loyalty improvement by putting in place various strategies that will help to ensure customer retention and increase the likelihood of a customer returning to buy Cadbury.

Stage 3: Strategy

The first objective to focuses on enhancing customer satisfaction will be accomplished by the company considering the application of innovative approaches towards improving the attractiveness of the chocolate bars packaging materials. For instance, the packaging materials can be designed attractively to attract the attention of children through the use of matching colors, which are easily noticed by both children and adults. Moreover, the company can add to the existing chocolate tastes and flavors to give the customers a wider arrange of chocolates to choose from (Chang, 2016).

The second objective touches on the improvement of customer loyalty. Various things can be done to enhance the reliability of current customers. Firstly, providing discounts may increase the number of returning customers who may become loyal to the company with time. Secondly, firstime customers can be gifted, increasing their likelihood to return (Chang, 2016).

Stage 4: Implementation/tactics

The 7 Ps approach will be used to ensure full implementation of the proposed objectives. The first approach is the products. The company will ensure the availability of a wide range of products for customers to choose from. Secondly, the company should ensure physical presence in as many countries as possible to ensure easy access to their products. Pricing, on the other hand, should be tightly regulated to prevent overexploitation of customers as well as ensuring considerable profit for the company. Advertisements for the company products and promotions are key to increasing sales. Therefore, the company should invest more resources in the brand promotion (Chang, 2016).

When a company is people-centered, it implies that the customers will feel appreciated and that their needs are met, which translates into increased customer loyalty. The entire process of product development should be evaluated to ensure that the process remains safe for both people and the surrounding environment. Finally, physical evidence of the existence of the company will help significantly in ensuring the implementation of the second objective that touches on customer loyalty (Chang, 2016).

Action

Gantt Chat

The action to actualize all the tactics will be performed based on the Gantt chat presented below.

Activity 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Objective one
Feedback Mechanism
Survey
Change implementation
Review
Objective two
Make public products available.
Create original content
Review

 

Stage 6: Control

 

Month KPIs Increase Increase in returning customers Quarterly review
JAN 0.5 0.2
FEB 0.5 0.2
MAR 0.5 0.2 Review
APR 0.5 0.2
MAY 0.5 0.2
JUN 0.5 0.2 Review
JUL 0.5 0.2
AUG 0.5 0.2
SEP 0.5 0.2 Review
OCT 0.5 0.2
NOV 0.5 0.2
DEC 0.5 0.2 Review

 

Conclusion

Cadbury are currently operating on a conceivably an excellent marketing strategy that has helped the company to maintain a top-selling position of its brand in the UK market. However, for the company to perform even better and beat the top confectionery company, Mars, Cadbury’s need to consider implementing the two objectives suggested in this report. The first objective dwells on the issue of customer satisfaction, which reflects the ability of the customer to return another round of shopping. This objective can be evaluated by scoring the company’s performance indicators. An increase in the KPIs score can potentially increase the reputation of the company and build trust in customers. It is also essential for the company to consider extending the customer satisfaction to developing bonds with the customers to ensure the retention of customers. This second objective is geared toward building customer loyalty. Customer loyalty is an essential competitive advantage that the company could use to stay ahead of other similar companies in the market.

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