RE-LAUNCH STRATEGY OF CADBURYS PICNIC

Submitted toMr. Dharmendra Pandey Advertising and Sales Promotion Faculty Guide Amity School of Business

Submitted byAbhishek Gupta Marketing and Sales B22 A3914709043

EXECUTIVE SUMMARY
A Study of Indian Chocolate Industry & Re-Launch Strategy for Cadburys Picnic in India is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which enlightens us about the size & status of chocolate industry in India. The project gives information about the competitors, their market share, and their product basket and highlights success features. The project also covers a brief study of Cadburys India Limited the biggest player in the Indian Chocolate Industry with reference to its presence, market share, product offerings, marketing strategies, strengths & weaknesses, success factors and Worm Controversy Management. Also, the implication of pricing, distribution strategies and impact of external environment has been recorded. The project throws light on one of the Cadburys product (Cadburys picnic) which failed in India market. Gives an overview of the reasons for the failure and try to give a promotion strategy as to how Cadbury can re-launch the product. This project aims at understanding the overall Chocolate Industry in India, various factors affecting the growth and success of chocolate industry in India, the challenges and opportunities which the market offers and the changing trends in the Indian Chocolate Industry. The project also covers a brief study of Cadburys India with reference to above points. Apart from that, the project also gives a detailed study on Cadburys Picnic - A product that failed in The Indian market and gives a marketing strategy for re-launching the product in the India.

MARKETING OF CHOCOLATES IN INDIA

Traditionally, chocolates were always targeted at children. But stagnancy in growth rates made the companies re-think their strategies. Cadbury was the first chocolate company that took the market by storm by repositioning brands at adults, as opposed to children. BUYING BEHAVIOUR Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates are impulse purchases. Chocolates are bought predominantly by adults and gifted to children. The wholesaler usually deals in all kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are placed near the counter. Chocolates are kept in cardboard boxes and are also delivered in the same. ... In a few of the cases the chocolates were kept separately (as per equipment provided by the manufacturer e.g. VISI Coolers), In addition to marketing promotions companies have been focusing extensively on the promotions by the sales staff. Also the companies can devise there marketing strategies that are catering to specific segments and are thus more effective. NATURE OF RETAIL OUTLET Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space allocated for the chocolates was less when compared to the total area of the shop. Of the space allocated for chocolates, Cadbury brands occupied more than Nestle brands. The chocolates category thrives on excitement. It's all about giving the consumer a choice and taste which they enjoy. STOCKING OF THE PRODUCTS In most of the cases, various brands of chocolates are kept together. In some of the cases the chocolates are stocked depending on the manufacturers provision. The chocolates are kept in Glass Jars and boxes These are provided by the respective companies along with the product. The chocolates are kept there. But in most of the cases chocolates are stocked near the counter. Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates for the customer who is visiting the store.

PROBLEMS & CHALLENGES IN INDIAN CHOCOLATE INDUSTRY

TEMPERATURE A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The temperatures can reach as high as 48 degrees in summers, whereas chocolate starts melting at body temperature (about 37-38 degrees) .Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer. UNAVAILABILITY OF CONTROLLED REFRIGERATION India does not have controlled refrigerated distribution. Air-condition supermarkets are rare. Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies revise ingredients to make chocolate withstand heat, and so Indian chocolates are more resilient to heat than Eurupean chocolates by a factor of 2 degrees. Ironically, the chocolate market has grown recently because smaller retailers have stuffed fridges and coolers supplied by the cola companies Coke and Pepsi with chocolates. Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold down power costs the shopkeepers switch off the fridges at night. As a result the cocoa fat melts and migrates to the main body of the chocolate bar. When the cooling is switched on in the morning, the cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle tried to provide fridges with see-through doors, but was appalled to see its chocolates sandwiched between dead chicken, butter and vegetables. Small coolers were provided to retailers to keep the chocolate from melting, but that didn't quite do the trick. Electricity costs money and is not provided in a uniform way, so on and off the electricity goes and the product may suffer. RAW MATERIALS Cocoa is the key raw material and accounts for around 35% of the total material cost (including packaging) of chocolates. The price of cocoa has been hitting a new high of late. TRANSPORTATION Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a direct network in rural areas is a daunting task since the infrastructure is poor in India in rural areas.

THREAT FROM IMPORTED BRANDS Free availability of imported brands bought through illegal routes pose a threat to the domestic chocolate industry. Usually, these imported chocolates taste better than domestic chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these imported chocolates. However, the premium brands, which come through official channels, do not pose a threat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. These are not only of low quality, but are brought very near to their expiry dates. Most of the cheap chocolate brands that are available do not meet Indian Food Regulations.

MAJOR PLAYERS
The major players in the Indian Chocolate Industry are: 1. CADBURYS INDIA LIMITED Cadbury India is a food product company with interests in Chocolate Confectionery, Milk Food Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery business with a market share of over 70%. Some of the key brands of Cadbury are Cadbury Dairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks segment, Cadbury's main product - Bournvita is the leading Malted Food Drink in the country. Cadbury is the world's largest confectionery company and its origins can be traced back to 1783 when Jacob Schweppe perfected his process for manufacturing carbonated mineral water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate. Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and in the mid twenties Cadbury's Dairy Milk gained its status as the brand leader. Cadbury India began its operations in 1948 by importing chocolates and then repacking them before distribution in the Indian market. Today, Cadbury has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). Its corporate office is in Mumbai. Worldwide, Cadbury employs 60,000 people in over 200 countries. 2. NESTLE INDIA Nestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food products such as infant food, milk products, beverages, prepared dishes & cooking aids, and chocolates & confectionary. Some of the famous brands of Nestle are NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh 'n' Natural Dahi and NESTLE Jeera Raita. Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestle's first

product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired the AngloSwiss Condensed Milk Company. Nestle's relationship with India started 1912, when it began trading as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. After independence, in response to the then economic policies, which emphasized local production, Nestle formed a company in India, namely Nestle India Ltd, and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestle to develop the milk economy. In Moga, Nestle educated and advised farmers regarding basic farming and animal husbandry practices such as increasing the milk yield of the cows through improved dairy farming methods, irrigation, scientific crop management practices etc. Nestle set up milk collection centres that ensured prompt collection and paid fair prices. Thus, Nestle transformed Moga into a prosperous and vibrant milk district. In 1967, Nestle set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. Nestle opened its third factor in Nanjangud (Karnataka) in 1989. Thereafter, Nestle India opened factories in Samalkha (Haryana), in 1993 and two in Goa at Ponda, and Bicholim in 1995 and 1997 respectively. Today, Nestle is the world's largest and most diversified food company. It has around 2,50,000 employees worldwide, operated 500 factories in approximately 100 countries and offers over 8,000 products to millions of consumers universally. 3. THE GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION (GCMMF) AMUL Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organisation. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning "priceless", are found in several Indian languages. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs. 52.55 billion in 2007-08). Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices. The company is trying to push its chocolate sales through its extensive dairy distribution network. It is giving discount offers for its recently launched sugar-free chocolates. The company has also placed its chocolate products at lesser price points compared with its
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competitors. Other chocolate brands by Amul include Bindaaz, Fundoo, Almond bar, Milk chocolate and Fruit-n-nut. Yet chocolate has never been a major thrust area for the company. It still remains one of its non-core categories. Its chocolate drinks have received better response than its chocolates. The chocolate category in India is also seeing increased activity with MNCs such as Hersheys planning to introduce products from its global stable in India in the coming year. Amul is looking at building a bigger portfolio in this category by introducing new types of Chocolates

CADBURYS IN INDIA

CADBURYS OVERVIEW
Half a century of constant innovation, constant value addition, constant success. Cadbury India Ltd. (CIL), a part of the Cadbury Schweppes group, is India's leading confectionery manufacturer with a 70% volume share of the chocolate market. And is synonymous with chocolate in the minds of countless Indians - young and old. The company is also a key player in the malted food drink and sugar confectionery markets in the country. Today, the governing objective for Cadbury India is to deliver Superior Shareholder Value and to see the brand in every pocket, in every home.

CADBURYS INDIA LIMITED

Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The companys original name was Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, the name was changed to Hindustan Cocoa Products. CSOLs shareholding was increased to 51% in Jan 83 through a preferential rights issue of Rs700mm. The current name was restored in Dec 89. In 2001, Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. The parent holds over 90% of the equity capital after the first open offer. A second open offer has been made to buyback the balance shareholding, after which the company would operate as a 100% subsidiary of Cadbury Schweppes Plc, Ever since the Cadbury is in India in 1947; Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. The company today employs nearly 2000 people across India. Its one of the oldest and strongest players in the Indian confectionary industry with an estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent throughout the 1990s. Cadbury is known for its exceptional capabilities in product innovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all occasions and moods. Today, the company reaches millions of loyal customers through a distribution network of 5.5 lakhs outlets across the country and this number is increasing everyday.

PRODUCT MIX - CHOCOLATES

PRODUCT BASKET- Category Brand Variants Bars Dairy Milk Plain Fruit n Nuts Double Decker Roasted Almond Chunky 5-Star 5 Star Count Lines 5 Star Chrunchie Milk Treat Chocolate Orange Wafer Chocolate Perk Perk Perk XL Other Chocki Mint, Strawberry & Chocolate Premium/ Gift Chocolates Temptation Rum, Cashew, Almond & Orange Celebrations Various Gift Packs

STRATEGIES OF CADBURYS
CADBURY'S CREATIVE LAUNCH
A new after dinner' segment Cadbury Desserts for sweet moments after dinner Khaane Ke baad Kuch Meetha Ho Jaye Rs. 20/- per packet of 44 gms Cadbury Dairy Milk (CDM) Desserts with rich indulgent crme center, in exotic & traditional flavors of Tiramisu and Kalakand. CDM Desserts offer the perfect rounding off taste, after meal that adds special Meetha' moments to the family. The rich tastes of CDM combined with the unique crme center in exotic flavors provide a special chocolate experience. CDM Desserts add delight to the after-meal moments, especially with the consumers whose current choice of sweets range from home made delicacies to fruits to meethai.

DISTRIBUTION
Chocolate needs to be distributed directly, unlike other FMCG products like soaps and detergents, which can be sold through a wholesale network. 90% of chocolate products are sold directly to retailers. Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions. Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers.

The company has a total consumer base of over 65 million. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed VISI coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality and thereby offtake.

PROMOTION
Typically it is said that chocolates are being eaten when everyone is happy. And this is something advertising has always portrayed. But it is found chocolates are eaten under diverse conditions and moods - when people are anxious, when they are sad, when happy a whole range of emotions. Condensing these views & thoughts, it can be said chocolate is a true soul mate. Someone who is with you through the ups and downs of life, helping you bounce back. And that's what Cadbury's Dairy Milk (CDM) positioned itself as - a special friend.

RE-INVENTING CABDURY
Kya Swad Hai Zindagi Mein redefined the way Indians looked at Cadbury Chocolates. (The commercial showed a beautiful young lady overcoming all obstacles on the cricket ground, crossing boundary, watchman, securities and embracing her lover who won the game by hitting a six). This theme introduced in around mid 90s bought instant growth to Cadburys Dairy Milk. The Ad campaign ran successful for about four years and immersed deeper inside hearts of Indians. In March 2002, Cadbury launched its next advertisement campaign for its flagship chocolate brand, Cadbury's Dairy Milk (CDM). The campaign featured a television (TV) commercial that was significantly different from the company's earlier commercials for the brand. It featured Cyrus Broacha interviewing college students and asking why they liked to eat CDM. This was followed by college students 'singing' their excuses for eating CDM. Just as the commercial seems all set to end with the students and Cyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye' (those who want to eat, will find excuses), a student comes up and questions Cyrus. The advertisement aimed at conveying the idea that no specific occasion is required for consuming CDM. This was a significant departure from CIL's strategy of appealing to adults in India, who sought a rational justification for indulging in chocolate consumption. Cadbury roped in Preity Zinta for its PERK brand. Preity Zintas angelic dimples laid the foundation for what would become the Indian teenagers favorite snack. After this campaign, PERKS sale surged. Cadburys advertising has, over the past few years, aptly reflected Indias passion for chocolates.

CADBURY PICNIC
BACKGROUND
Cadbury Picnic is a chocolate bar with milk chocolate and peanuts, covering nougat, caramel, and puffed rice. Picnic is a random composition and has different fairly chunky ingredients. The Picnic brand was launched in India in the year 1998. Cadbury launched Picnic, which is one of its major chocolate from its international portfolio. Picnic was launched to further evolve the chocolate market into the snacking area, a task that has already been initiated by Perk. Picnic was specifically designed for Russian taste thus not suited to the Indian consumer. Indians felt that this chocolate had too many textures and too many flavours, none of which really made a coherent experience. Indians are very particular about tastes and may not have taken the product taste too well. Picnic was re-launched with a changed composition in smaller packs in the year 1999 26 gm pack priced at Rs. 10 and 43-gm pack priced at Rs.15. Picnic is shaped in a very rough manner and can rightly be called ugly looking. Nothing agrees with this better than the slogan for this particular product "Deliciously Ugly". The bars are lumpy in shape and may not have been liked by the Indian consumer. 1998 was a time when India was not really open to such a product. Targeted at males of 1829 at time when a third of population was below 15 years of age in 2000 points that timing was not correct. Picnic was wrong product in wrong time at wrong place destined to fail !!

CADBURY PICNIC: AN APPEAL TO THE FIVE SENSES

The Packaging
The packaging is purple. The word Picnic covers most of the front and also it depicts peanuts and raisins. The packaging informs you in gold writing that its Packed with Peanuts and Raisins. Turning the bar over, the nutritional information, barcode, best before date, weight, ingredients and contact information can be seen.

Appearance upon Opening

Cadbury PICNIC is around five inches long and it appears to be packed with SOMETHING. There are large bumps all over the upper surface of the rounded bar. The chocolate is brown colored milk chocolate.

The Smell
The smell of the chocolate lacks the appealing smell associated with other chocolates.

The Taste
Cadbury PICNIC is crunchy (at the top teeth) and chewy (bottom) (due to the cereal and nuts for the crunch, and the caramel and raisins for the chew). The peanuts are not a dominating flavour in the Picnic unlike in Snickers; in fact, the raisins have a stronger flavour. The cereals are the most noticeable crunch texture, and the caramel makes the bar chewy. The flavour is difficult to describe, perhaps because there were so many different flavours and textures presenting in one bar. The flavours bind together, providing a very appealing taste sensation.

PROPOSED RE-LAUNCH OF PICNIC

Rationale behind the re-Launch
Considering the current competitive market and intense competition Cadbury can no longer rely on its flagship product even though it faces low competition in the market By re-launching Cadbury PICNIC chocolate as an energy bar the product portfolio should be expanded which can prove to be a flanking strategy for Cadbury. Considering the average age composition of the Indian population which lies around 25-30 Cadbury PICNIC chocolate if launched as energy bar on the move it can have a huge target segment. Also the company has a state of art manufacturing unit for the production of Cadbury PICNIC bar which can be used without causing additional cash outflow in infrastructure development. Cadbury PICNIC chocolate being rich with peanuts and raisins should be relaunched since it can fulfill energy needs in a tasty way and its nutritional facts can be highlighted for this purpose. Cadbury can use the re-launch to make competitors re-strategize also it can have the first mover advantage. There is a very low competition in the market for an energy bar at an affordable price. So, Cadbury being the market leader in Indian chocolate industry with deep financial backing, advanced technology, extensive distribution network and a trusted name can easily cover the gap.

STP ANALYSIS
Segmentation
Cadburys Picnic is a mass market product. This confirms that all demographic segments & geographic segments have the potential. Customers for chocolate can be distinctly identified by their behavior patterns (perceived benefit of the product). Thus, behavioral segmentation is adopted as the basis of segmentation. The market is segmented as per the benefit sought by the consumers. The market can be divided into customers looking for Fun & Relishing, Filling, Instant Energy, Socializing.

Targeting
The target chosen for re-launching this product are the consumers looking for Instant energy amidst their fast-paced life. Cadbury Picnic scoring high on nutritional facts and has energy giving ingredients like peanuts, raisins it can initially target from teenagers to working class people. These would involve school-going children during their lunch breaks, college students, working people under stress during the office hours.

Positioning
We propose to position Cadbury Picnic Bar as TOTAL ENERGY REPLENISHER ON THE MOVE as a meal between the meals.

MARKETING MIX
Product:
Cadbury PICNIC should be showcased as an Instant Tasty Energy Bar for all those who have the need for energy replenishment on the run. Cadbury Picnic should have a proper mould which would give all the Picnic Bars a uniform shape and size making it much more acceptable.
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The Picnic Bars should also have a prefixed amount of peanuts and raisins which will make the taste of the Picnic bar uniform and also the calories in each bar at the same quantity.

Place:
Cadbury PICNIC should make full utilisation of the highly efficient distribution network to make sure that Cadbury Picnic taps the full potential market. One more strategy that Cadbury Picnic should use is a higher or an increase in the trade discount should be given. Also Cadbury Picnic has to concentrate more on the Tier I and Tier II cities where the people would actually like a chocolate energy bar to fulfill their energy needs.

Price:
The price of the energy bar should be around 10 Rs. per bar which would not only be the same as that of the older price but will also be in correspondence to the similar products available in the market today.

Promotion:
Cadbury Picnic has to go for an aggressive promotion and marketing campaign. The traders should be motivated to gain maximum shelf space for PICNIC leading to more visibility. Selection of a brand ambassador for the bar who should be such that there is an easy association for the ambassador and the energy bar Picnic. Brand Ambassador like Akshay Kumar should be roped in as he is considered a Man with of lot energy and has a good popularity among the Indian Masses. Heavy display of the Cadbury Picnic bar at Public Places by the use of banners, billboards, dazzlers and kiosks. Sponsoring of certain sports and other energy sapping events should be done in such a way that would help in gaining a good presence in the consumers mind. Also advertisements should be displayed or telecasted during the primetime in order to get the maximum viewership.

PROPOSED ADVERTISEMENTS FOR CADBURYS PICNIC

Advertisement 1

Advertisement 2

In the above shown advertisements the clear cut message of energy could be seen. Popeye spinach is considered as a great source of energy for him and in the above advertisements his Spinich is replaced with Cadburys picnic which now gives his instant energy and is his new choice.

Advertisement 3 Part 1

Advertisement 3 Part 2

Advertisement 3 is an innovative advertisement, in which the 1st page would be part 1 and it will open out to part 2 of the advertisement. Cadburys Pappu Pass Ho Gaya was a Hit campaign and trying to leverage that same Advertisement Pappu Pahalwan ban Gaya campaign could be launched.

CONCLUSION
The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes, beliefs, income level and spending. At one hand, we have designer chocolates that are consumed when priced at even Rs 2500/kg while there are places in India where people have never even tasted chocolates once. Understanding the consumer demands and maintaining the quality will be essential. Companies will have to keep themselves abreast with the developments in other parts of the world. PRICING is the key for companies to make their product reach consumers pockets. Right pricing will make or break the product SUCCESS. Economical distribution of the products will also be equally important. The companies strategies should focus on driving sales through a right product mix, efficient materials procurement, reduced wastages, increased factory efficiencies and improved supply chain management. Theres an immense scope for growth of chocolate industry in India - geographically as well as in the product offering. The Indian Chocolate Industry is destined to grow and will do so in the future.