Project Report on Marketing Mix in

Industrial sector

SERVICES
By Parikshit Soni
4th Sam MBA (Marketing and Finance)
TABLE OF CONTENTS
Introduction ..................................................... 3
1. History ...................................................... 5
2. What is marketing Mix .............................. 7
3. Four P’S ................................................... 8
4. The Service marketing mix ..................... 10
5. Four C’s of Marketing Mix ...................... 13
6. Characteristice of marketing MiX ........... 15
7. Limitations of marketing Mix................... 17
8. Key Challenges ...................................... 17
9. SWOT Analysis ...................................... 18
10. Marketing Mix of Chocolate Industry ... 20
11. Marketing - Promotion of Chocolates in
India 24
12. Cadbury’s India Limited – A Study ...... 27
13. Nestle India Limited – A Study ............ 35
14. Competitive Analysis of Cadbury and
Nestle ........................................................... 41
15. Marketing Mix Cadbury Product.......... 43
16. Marketing Mix Nestle Product ............. 44
17. Competitive Assessment .................... 44
18. Suggestion And Recomendations....... 45
19. Conclusion .......................................... 46

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Marketing Mix in Industrial Sector

INTRODUCTION

The marketing mix is a business tool used in marketing and by marketers. The marketing mix
is often crucial when determining a product or brand's offer, and is often associated with the
four P's: price, product, promotion, and place. In service marketing, however, the four Ps are
expanded to the seven P's or Seven P's to address the different nature of services.

In the 1990s, the concept of four C's was introduced as a more customer-driven replacement
of four P's. There are two theories based on four Cs: Lauterborn's four Cs (consumer, cost,
communication, convenience), and Shimizu's four Cs (commodity, cost, communication,
channel).

Marketing mix is originating from the single P (price) of microeconomic theory (Chong, 2003).
McCarthy (1964) offered the “marketing mix”, often referred to as the “4Ps”, as a means of
translating marketing planning into practice (Bennett, 1997). Marketing mix is not a scientific
theory, but merely a conceptual framework that identifies three principal decision-making
managers make in configuring their offerings to suit consumers’ needs. The tools can be used
to develop both long-term strategies and short-term tactical programmed (Palmer, 2004). The
idea of the marketing mix is the same idea as when mixing a cake. A baker will alter the
proportions of ingredients in a cake depending on the type of cake we wish to bake. The
proportions in the marketing mix can be altered in the same way and differ from the product to
product. The marketing mix management paradigm has dominated marketing thought,
research and practice, and “as a creator of differentiation” since it was introduced in 1940s.
Kent (1986) refers to the 4Ps of the marketing mix as “the holy quadruple…of the marketing
faith…written in tablets of stone”. Marketing mix has been extremely influential in informing the
development of both marketing theory and practice (Möller, 2006). The main reasons the
marketing mix is a powerful concept are It makes marketing seem easy to handle, allows the
separation of marketing from other activities of the firm and the delegation of marketing tasks
to specialists; and - The components of the marketing mix can change a firm’s competitive

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Marketing Mix in Industrial Sector

position (Grönroos, 1994). The marketing mix concept also has two important benefits. First, it
is an important tool used to enable one to see that the marketing manager’s job is, in a large
part, a matter of trading off the benefits of one’s competitive strengths in the marketing mix
against the benefits of others. The second benefit of the marketing mix is that it helps to reveal
another dimension of the marketing manager’s job. All managers have to allocate available
resources among various demands, and the marketing manager will in turn allocate these
available resources among the various competitive devices of the marketing mix. In doing so,
this will help to instil the marketing philosophy in the organization (Low and Tan, 1995).
However, Möller (2006) highlighted that the shortcomings of the 4Ps marketing mix framework,
as the pillars of the traditional marketing management have frequently become the target of
intense criticism. A number of critics even go as far as rejecting the 4Ps altogether, proposing
alternative frameworks. Since its introduction, developments on the commercial landscape and
changes in consumer and organizational attitudes over the last few decades (1940s – 2000s)
have frequently prompted marketing thinkers to explore new theoretical approaches and
expanding the scope of the marketing mix concept. Number of researchers (e.g. Grönroos,
1994; Constantinides, 2002; Goi, 2005; Möller, 2006) explores more ‘P’s instead of traditional
4Ps only currently applied in the market. However, the creation of new ‘P’ seems like unstop.
New Ps were introduced into the marketing scene in order to face up into a highly competitively
charged environment (Low and Tan, 1995). Thus, the main objective of this study is to review
the present marketing mix applies particularly to the marketing.

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Marketing Mix in Industrial Sector

1. HISTORY

In his paper "The Concept of the Marketing Mix", Neil Borden reconstructed the history of the
term "marketing mix". He started teaching the term after an associate, James Culliton,
described the role of the marketing manager in 1948 as a "mixer of ingredients"; one who
sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes
along, sometimes adapts a recipe from immediately available ingredients, and at other times
invents new ingredients no one else has tried

Borden (1965) claims to be the first to have used the term “marketing mix” and that it was
suggested to him by Culliton’s (1948) description of a business executive as “mixer of
ingredients”. An executive is “a mixer of ingredients, who sometimes follows a recipe as he
goes along, sometimes adapts a recipe to the ingredients immediately available, and
sometimes experiments with or invents ingredients no one else has tried” (Culliton, 1948). The
early marketing concept in a similar way to the notion of the marketing mix, based on the idea
of action parameters presented in 1930s by Stackelberg (1939). Rasmussen (1955) then
developed what became known as parameter theory. He proposes that the four determinants
of competition and sales are price, quality, service and advertising. Mickwitz (1959) applies this
theory to the Product Life Cycle Concept. Borden’s original marketing mix had a set of 12
elements namely: product planning; pricing; branding; channels of distribution; personal
selling; advertising; promotions; packaging; display; servicing; physical handling; and fact
finding and analysis. Frey (1961) suggests that marketing variables should be divided into two
parts: the offering (product, packaging, brand, price and service) and the methods and tools
(distribution channels, personal selling, advertising, sales promotion and publicity). On the
other hand, Lazer and Kelly (1962) and Lazer, Culley and Staudt (1973) suggested three
elements of marketing mix: the goods and services mix, the distribution mix and the
communication mix. McCarthy (1964) refined Borden’s (1965) idea further and defined the
marketing mix as a combination of all of the factors at a marketing manger’s command to
satisfy the target market. He regrouped Borden’s 12 elements to four elements or 4Ps, namely

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product, price, promotion and place at a marketing manger’s command to satisfy the target
market. Especially in 1980s onward, number of researchers proposes new ‘P’ into the
marketing mix. Judd (1987) proposes a fifth P (people). Booms and Bitner (1980) add 3 Ps
(participants, physical evidence and process) to the original 4 Ps to apply the marketing mix
concept to service. Kotler (1986) adds political power and public opinion formation to the Ps
concept. Baumgartner (1991) suggests the concept of 15 Ps. MaGrath (1986) suggests the
addition of 3 Ps (personnel, physical facilities and process management). Vignalis and Davis
(1994) suggests the addition of S (service) to the marketing mix. Goldsmith (1999) suggests
that there should be 8 Ps (product, price, place, promotion, participants, physical evidence,
process and personalization). Möller (2006) presents an up-to-date picture of the current
standing in the debate around the Mix as marketing paradigm and predominant marketing
management tool by reviewing academic views from five marketing management sub-
disciplines (consumer marketing, relationship marketing, services marketing, retail marketing
and industrial marketing) and an emerging marketing (E-Commerce). Most of researchers and
writers reviewed in these domains’ express serious doubts as to the role of the Mix as
marketing management tool in its original form, proposing alternative approaches, which is
adding new parameters to the original Mix or replacing it with alternative frameworks
altogether.

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Marketing Mix in Industrial Sector

2. WHAT IS MARKETING MIX

The marketing mix is one of the most famous marketing terms. The marketing mix is the
tactical or operational part of a marketing plan. The marketing mix is also called the 4Ps and
the 7Ps.

The 4Ps are price, place, product and promotion. The services marketing mix is also called the
7Ps and includes the addition of process, people and physical evidence.

For someone who is new to marketing, the term heard most often is – “Marketing mix”. For
those in whom marketing runs in the blood, the term also flows and they don’t just hear it, they
live it. The journey from hearing the term to living it is indeed a big one and may span years, if
not decades. It consists of many intermediate steps where one learns to use the aspects of the
marketing mix – either individually or in combination. In the simplest form, Marketing Mix
consists of four aspects, more commonly known as the four P’s.

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Marketing Mix in Industrial Sector

3. FOUR P’S

Product, Price, Place and Promotion. Each of the four P’s is a study in itself and takes years to
master.

A marketing career is not for everyone. One needs to have the flair to understand not only the
marketing mix but also to understand people as well, people who will end up being customers.
Marketing mix is about understanding the customers and working around the four P’s to target
the customer. There are various aspects to customer targeting. However, in this session, we
will limit ourselves to the introduction of the marketing mix – a brief about the four P’s of the
mix.

 Product: The heart of the marketing mix. Without the product, there would be no need
for price, promotion or place. There are many aspects to product management. The
most commonly used models are the product life-cycle (PLC) management and the
customer adoption curve (AC). PLC is about the stages a product goes through and
how as a product manager, one should be ready for it in terms of the overall marketing
mix. AC is about how the product will be accepted in the market place so that other
aspects of marketing mix can be aligned.

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Marketing Mix in Industrial Sector

 Price: Price can really make or break the product. It can fetch good returns or leave the
company in doldrums. It is very important to price the product right – neither too high
nor too low. This is the most challenging part of pricing – how to find the right price,
especially in a competitive environment. There are various techniques used, however in
today’s world, innovation in pricing is a key skill needed of marketers.

 Place: Place is about the distribution strategy of the company for its products. It
answers questions about the number of intermediaries, the flow of ownership, the
commissions and finally the consumer reach. With the SCM (supply chain
management) evolution, distribution strategies have the ability to create a big impact on
the product success. Companies are investing a lot of money in getting their distribution
strategies right.

 Promotion: The most important aspect of promotion is advertising. But promotion is not
just about advertising. It also includes personal selling, handling public relations and
devising sales promotional tactics. In recent times, promotion is also about forming
strategic relationships with the clients. There are key account managers who deal with
specific clients and interact with them on a regular basis. Good promotional strategy can
click with customer’s big time and bring in a windfall of revenue.

The four P’s model has been expanded to seven P’s (maybe more that I am not aware of) and
other equivalent models to suit different industries and sectors. However, the gist is very
simple it is really about the four P’s mentioned above. Only when one has a good and clear
understanding of the four P’s, one can truly set himself/ herself on the path of a marketing
career.

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Marketing Mix in Industrial Sector

4. THE SERVICE MARKETING MIX

This part discusses the special issues concerning the marketing of services. This is not to
imply that the principles of marketing covered in the previous chapters of this Handbook do not
apply to services rather it reflects the particular characteristic of services in addition to those
typical for products.

Cowell states that what is significant about services are the relative dominance of intangible
attributes in the make-up of the “service product”. Services are a special kind of product. They
may require special understanding and special marketing efforts.

The provision of the continuing education contains the element of the tangible and intangible. It
usually provides a learning material (physical good) and also numbers of the service activities
(teaching processes, contact with customers, organization of the courses, etc.). The distinction
between physical and service offering can, therefore, be best understood as a matter of
degree rather that in absolute terms. The continuing education is service –based since the
value of this product is dependent on the design and delivery of the CE courses rather than the
cost of the physical product (teaching materials, CDs, etc.)

The services marketing mix is an extension of the 4-Ps framework. The essential elements of
product, promotion, price and place remain but three additional variables – people, physical
evidence and process – are included to 7–Ps mix. The need for the extension is due to the
high degree of direct contact between the CE providers and the customers, the highly visible
nature of the service process, and the simultaneity of the production and consumption. While it
is possible to discuss people, physical evidence and process within the original-Ps framework
(for example people can be considered part of the product offering) the extension allows a
more thorough analysis of the marketing ingredients necessary for successful services
marketing.

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Marketing Mix in Industrial Sector

 People: because of the simultaneity of production and consumption in services the CE

staff occupy the key position in influencing customer’s perceptions of product quality. In
fact, the service quality is inseparable from the quality-of-service provider. An important
marketing task is to set standards to improve quality of services provided by employees
and monitor their performance. Without training and control employees tend to be
variable in their performance leading to variable service quality. Training is crucial so
that employees understand the appropriate forms of behavior and trainees adopt the
best practices of the andragogy

 Physical evidence: this is the environment in which the service is delivered and any
tangible goods that facilitate the performance and communication of the service.
Customers look for clues to the likely quality of a service also by inspecting the tangible
evidence. For example, prospective customers may look to the design of learning
materials, the appearance of facilities, staff, etc.

 Process: this means procedures, mechanism and flow of activities by which a service is
acquired. Process decisions radically affect how a service is delivered to customers.
The service in CE includes several processes e.g., first contact with customers,
administrative procedure regarding course delivery, preparation, delivery and evaluation
of the courses. The following guideline can be useful for successful CE management:

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 ensure that marketing happens at all levels from the marketing department to where the
service is provided

 consider introducing flexibility in providing the service; when feasible customize the
service to the needs of customers

 recruit high quality staff treat them well and communicate clearly to them: their attitudes
and behavior are the key to service quality and differentiations

 attempt to market to existing customers to increase their use of the service, or to take
up new service products

 step up a quick response facility to customer problems and complaints

 employ new technology to provide better services at lower costs

 use branding to clearly differentiate service offering from the competition in the minds of
target customers

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5. FOUR C’S OF MARKETING MIX

Now days, organizations treat their customers like kings. In the current scenario, the four C’s
has thus replaced the four P’s of marketing making it a more customer oriented model. Koichi
Shimizu in the year 1973 proposed a four C’s classification.

 Customer: The first C in this marketing mix is the customer’s wants and needs. Instead
of focusing on the product itself, the first C focuses on filling a void in the customer’s life.

This marketing strategy is important for businesses that are interested in seeking an
understanding of their customers. Once you understand your customer, it becomes much
easier to create a product that will be of benefit to them. The customer makes the purchase
decision and is, therefore, the most valuable resource in any marketing strategy.

 Cost: The Second C in this marketing mix is cost. Don’t confuse the cost of your
product with its price. Price is only a small segment of the overall cost of buying a
product to a customer. It is important to determine of overall cost – not price – of your
product to the customer. Cost not only includes price of the item, but also may include

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things such as the time it takes for the customer to get to your location in order to buy
your product, or the cost of gas that it takes to get them there. Cost can also include the
product’s benefit, or lack-there-of, to the customer.

 Convenience: The Third C within this marketing mix is convenience. Convenience is

similar to “place” in the 4P’s marketing strategy. However, these two are very different.
Place simply refers to where the product will be sold. Convenience is a much more
customer-oriented approach to this marketing strategy.

Once you have analyzed your customer’s habits, you should be able to know whether they
shop online or in stores as well as what they are willing to do to buy your product. The
overall cost of the product will determine in part its convenience to your target audience.
The goal is to make the product cost effective and simple enough for the customer to attain
the product without having to jump through hoops.

 Communication: Promotion of a product is used to sway customers in order to get

them to buy a product. Promotion can often be manipulative and ineffective. However,
communication is (again) a customer-oriented approach to the task of selling products.
Communication requires interaction between the buyer and seller. This marketing
strategy can very easily be implemented through the use of social media.

Marketing a product on your social media sites, or even including links to your social media
profiles can be very beneficial to your customers. This allows them to interact with your
brand on a personal level and will eventually lead to greater brand loyalty among your
customers.

 Applying the 4 C’s: The 4 C’s of marketing can be highly beneficial to any marketing
strategy. This strategy forces marketers to really understand their audience before they
even being to develop a product. This strategy requires communication throughout the
entire process, from start to finish, and begins with understanding what the customer
wants and needs out of your product. When utilizing the 4 C’s, just remember to always
think of your customer first, and communicate with them along the way. Consequently,
your audience will feel like you are speaking directly to them and their needs.

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6. CHARACTERISTICE OF MARKETING MIX

1. Marketing mix is the crux of marketing process

Marketing mix involves many crucial decisions relating to each element of the mix.
The impact of the mix will be the best when proper weightage is assigned to each
element and they are integrated so that the combined effect leads to the best
results.

2. Marketing mix has to be reviewed constantly in order to meet the changing

requirements

The marketing manager has to constantly review the mix and conditions of the
market and make necessary changes in the marketing mix according to changes in
the conditions and complexity of the market.

3. Changes in external environment necessitate alterations in the mix

Changes keep on taking place in the external environment. For many industries, the
customer is the most fluctuating variable of environment. Customers’ tastes and
preferences change very fast. Brand loyalty and purchasing power also change over
a period. The marketing manager has to carry out market analysis constantly to
make necessary changes in the marketing mix.

4. Changes taking place within the firm also necessitate changes in marketing
mix

Changes within the firm may take place due to technological changes, changes in
the product line or changes in the size and scale of operation. Such changes call for
similar changes in the marketing mix.

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Marketing Mix in Industrial Sector

5. Applicable to business and non-business organization

Marketing mix is applicable not only to business organizations but also to non-
business organizations, such as clubs and educational institutions. For instance, an
educational institution is expected to provide the right courses (product), charge the
right fees (price), promote the institution and the courses, and provide the courses at
the right place.

6. Helps to achieve organizational goals

An application of an appropriate marketing mix helps to achieve organizational goals

such as profits and market share.

7. Concentrates on customers

A thorough understanding of the customer is common to all the four elements. The
focus point of marketing mix is the customer, and the marketing mix is expected to
provide maximum customer satisfaction.

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Marketing Mix in Industrial Sector

7. LIMITATIONS OF MARKETING MIX

The marketing mix framework was particularly useful in the early days of the marketing
concept when physical products represented a larger portion of the economy. Today, with
marketing more integrated into organizations and with a wider variety of products and markets,
some authors have attempted to extend its usefulness by proposing a fifth P, such as
packaging, people, process, etc. Today however, the marketing mix most commonly remains
based on the 4 P's.

Despite its limitations and perhaps because of its simplicity, the use of this framework remains
strong and many marketing textbooks have been organized around it.

8. KEY CHALLENGES

Over the years, marketing managers have felt that the traditional marketing mix has its
limitations in how it is structured. Several important elements have been grouped within four
larger categories thereby belittling their true importance amid several factors. Two main
criticisms and their solutions: Lack of Focus on Services The conventional marketing mix tends
to be applicable to tangible goods i.e. the traditional definition of products. Services or
intangible goods are also a vital customer offering and can be planned for in much the same
way as physical products. To cater to the unique challenges of services, the 4P model has
been supplemented with 3 additional categories which are:

Physical Evidence is proof and a reassurance that a service was performed

People are the employees who deliver the service

Processes are the methods through which a service is executed and delivered to the customer
Lack of True Customer Focus Though a total focus on the customer and what they desire is a
vital element of the 4P model, this truth is often in danger of being overlooked by enthusiastic
marketing teams. To counter this, Robert F. Lauterborn put forward his customer centric four

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Cs classification in 1990. This model converts the four P’s into more customer oriented four
C’s:

 Product to Customer Solution

 Price to Customer Cost
 Promotion to Customer Communication
 Place to Customer Convenience

9. SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is
the first stage of planning and helps marketers to focus on key issues. SWOT stands for
strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal
SWOT factors. Opportunities and threats are external SWOT factors. A strength is a positive
internal factor. A weakness is a negative internal factor. An opportunity is a positive external
factor. A threat is a negative external factor. We should aim to turn our weaknesses into
strengths, and our threats into opportunities. Then finally, SWOT will give managers options to
match internal strengths with external opportunities. SWOT is that simple. The outcome should
be an increase in ‘value’ for customers – which hopefully will improve our competitive
advantage. The main purpose of SWOT analysis has to be to add value to our products and
services so that we can recruit new customers, retain loyal customers, and extend products
and services to customer segments over the long-term. If undertaken successfully, we can
then increase our Return on Investment (ROI).

A SWOT STRENGTH COULD BE:

 Your specialist marketing expertise.

 A new, innovative product or service.
 Location of your business.
 Quality processes and procedures.
 Any other aspect of your business that adds value to your product or service.
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A SWOT WEAKNESS COULD BE:

 Lack of marketing expertise.

 Undifferentiated products or services (i.e., in relation to your competitors).
 Location of your business.
 Poor quality goods or services.
 Damaged reputation.

A SWOT OPPORTUNITY COULD BE:

 A developing market such as the Internet.

 Mergers, joint ventures or strategic alliances.
 Moving into new market segments that offer improved profits.
 A new international market.

A SWOT THREAT COULD BE:

 A new competitor in your home market.

 Price wars with competitors.
 A competitor has a new, innovative product or service.
 Competitors have superior access to channels of distribution.
 Taxation is introduced on your product or service.

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10. MARKETING MIX OF CHOCOLATE

INDUSTRY

An Overview of Chocolate Industry in India the chocolate industry in India as it stands today is
dominated by two companies, both multinationals. The market leader is Cadbury with a lion's
share of 70 percent. The company's brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are
leaders their segments. Till the early 90s, Cadbury had a market share of over 80 percent, but
its party was spoiled when nestle appeared on the scene. The latter has introduced its
international brands in the country (Kit Kat, Lions), and now commands approximately 15
percent market share. The Gujarat Co-operative Milk Marketing Federation (GCMMF) and
Central Arecanut and Cocoa Manufactures and Processors Co-operative (CAMPCO) are the
other companies operating in this segment. Competition in the segment will get keener as
overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian
chocolate pie. Per Capita Chocolate Consumption (in lb) of first 15 countries of the world 1
Switzerland 22.36 2 Austria 20.13 3 Ireland 19.47 4 Germany 18.04 5 Norway 17.93 6
Denmark 17.66 7 United Kingdom 17.49 8 Belgium 13.16 9 Australia 12.99 10 Sweden 12.9
11 United States 11.64 12 France 11.38 13 Netherlands 10.56 14 Finland 10.45 15 Itlay 6.13.

INDIA, stands nowhere even near to these countries when compared in terms of Per Capita
Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a range
of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops,
toffees and sugar candies. Given India's mammoth population, it comes as a surprise that per
capita chocolate consumption in the country is dismally low - a mere 20 gms per Indian.
Compare this to over 7 kgs in most developed nations. However, Indians swallowed 22,000
tonnes of chocolate last year and consumption is growing at 10-12 percent annually. The
market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs. 4.16
billion in 1998. Volume growth which was over 20% pa in the 3 years preceding 1998, slowed
down thereafter. Both chocolate and sugar confectioneries have abysmally low penetration
levels, in fact, even lower than biscuits, which reach 56 per cent of the households. Market

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growth in the chocolate segment has hovered between 10 to 20%. In the last five years, the
category has grown by 14-15% on an average and will expect it to continue growing at a
similar rate in the next five years. The market presently has close to 60mn consumers and they
are mainly located in the urban areas. Growth will mainly come through an increase in
penetration as income levels improve. However, almost all of this consumption is in the cities,
and rural India is nearly ‘chocolate-free’. But the fact is that three quarters of Indians live in
Rural Areas. “Average summertime temperatures reach 43 degrees Celsius in India.
Chocolate melts at body temperature of 36 degrees.” Per capita consumption of chocolates in
India is minuscule at 20gms in India as compared to around 5-8 kgs and 8-10 kgs respectively
in most European countries. 1 Switzerland 10% 2 Austria 9% 3 Ireland 9% 4 Germany 8% 5
Norway 8% 6 Denmark 8% 7 United Kingdom 8% 8 Belgium 6% 9 Australia 6% 10 Sweden
6% 11 United States 5% 12 France 5% 13 Netherlands 5% 14 Finland 4% 15 Itlay 3% Rank
Countries Per Capita Consumption (in lb)

Awareness about chocolates is very high in urban areas at over 95%. Growth of other lifestyle
foods such as malted beverages and milk food have actually declined by 3.7 per cent and 11.7
per cent, however the Chocolates continue to grow at the rate of 12.6%. Low priced unit packs,
increased distribution reach and new product launches can be said to have fuelled this growth.
The launch of lower-priced, smaller bars of chocolate in the last two years and positioning of
chocolate as a substitute to traditional sweets during festivals, have boosted consumption.
This is also because chocolate, which was considered to be an elitist food, has caught the
fancy of buyers looking for a lifestyle item at affordable cost. Till recently, chocolate
consumption had been restricted by low purchasing power in the market. Chocolates and other
cocoa-based snack foods were looked upon as food suitable only for the well-off. After
economic liberalization in 1991, major changes have occurred in food habits, partly on account
of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of
the middle-class representing a third of the total population. Availability of chocolate products
has also exploded. A study had projected that sales of the Indian chocolate industry would rise
from $125/$130 million in 1998 to $175/$180 million by the year 2000 and to $450 million by
the year 2005 which actually happened irrespective of various negative factors. Per capita
chocolate consumption continues to be low at about 200g per person, being mainly consumed

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in urban areas. In the middle- and higher-income groups, 70 per cent of children, 43 per cent
of young adults and 16 per cent of adults consume chocolate. Chocolate Consumption
Structure: Children 55% Adults 12% Young Adults 33% Chocolate Consumption Structure.

Types of Chocolates Depending on what is added to (or removed from) the chocolate liquor,
different flavors and varieties of chocolate are produced. Each has a different chemical make-
up; the differences are not solely in the taste. 1. Unsweetened or Baking chocolate is simply
cooled, hardened chocolate liquor. It is used primarily as an ingredient in recipes, or as a
garnish. 2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter
and sugar added. Sweet cooking chocolate is basically the same, with more sugar for taste. 3.
Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added. This is
the most popular form for chocolate. It is primarily an eating chocolate. 4. Cocoa is chocolate
liquor with much of the cocoa butter removed, creating a fine powder. It can pick up moisture
and odors from other products, so you should keep cocoa in a cool, dry place, tightly covered.
There are several kinds of cocoa: • Low-fat cocoa has the most fat removed. It typically has
less than ten percent cocoa butter remaining. • Medium-fat cocoa has anywhere from ten to
twenty-two percent cocoa butter in it. • Drinking or Breakfast cocoa has over twenty-two
percent left in it. This is the cocoa used in chocolate milk powders like Nestle's Quik. • Dutch
process cocoa is cocoa which has been specially processed to neutralize the natural acids in
the chocolate. It is slightly darker and has a much different taste than regular cocoa. 5.
Decorator's chocolate or confectioner's chocolate isn't really chocolate at all, but a sort of
chocolate flavored candy used for things such as covering strawberries. It was created to melt
easily and harden quickly, but it isn't chocolate. Categories of Chocolates Commercial
Chocolates are available in the following forms: 1. Bars or Moulded Chocolates 2. Counts 3.
Panned Chocolates (Gems) 4. Éclairs 5. Assorted Chocolates • Bars or moulded chocolates
(like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, and Nestle Milky Bar) comprise
the largest segment, accounting for 37% of the total chocolate market in volume terms. • Wafer
chocolates such as Kit-Kat and Perk also belong to this segment. • Panned chocolates
accounts for 10% of the total chocolate market. Wafer chocolates such as Kit-Kat and Perk
also belong to this segment.

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Marketing Mix in Industrial Sector

Chocolate Manufacturing Process Workers cut the fruit of the cacao tree, or pods open and
scoop out the beans. These beans are allowed to ferment and then dry. Then they are
cleaned, roasted and hulled. Once the shells have been removed, they are called nibs. Nibs
are blended much like coffee beans, to produce different colors and flavors. Then they are
ground up and the cocoa butter is released. The heat from the grinding process causes this
mixture of cocoa butter and finely ground nibs to melt and form a free-flowing substance
known as chocolate liquor. From there, different varieties of chocolate are produced. Conching
Raw unprocessed chocolate is gritty, grainy and really not suitable for eating. Swiss chocolate
manufacturer Rudolph Lindt discovered a process of rolling and kneading chocolate that gives
it the smoother and richer quality that eating chocolate is known for today. The name
'conching' comes from the shell-like shape of the rollers used. The longer chocolate is
conched, the more luxurious it will feel on your tongue. Market Size (by value & by volume)
The Indian chocolate market is valued at Rs. 650 crores (i.e. Rs. 6.50 billion) a year. The
Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tons per annum, and
is valued in excess of US$ 80 million. Chocolate penetration in the country is a little over 4
percent, with India's metros proving to be the big draw clocking penetration in excess of 15
percent. Next, comes the relatively smaller cities/towns were consumption lags at about 8
percent. Chocolates are a luxury in the rural segment, which explains the mere 2 percent
penetration in villages. The market presently has close to 60mn consumers and they are
mainly located in the urban areas. Major Players & their Market Share the major players in the
Indian Chocolate Industry are: 1. Cadbury’s India Limited 2. Nestle India 3. The Gujarat Co-
operative Milk Marketing Federation (GCMMF) – AMUL 4. Cocoa Manufactures and
Processors Co-operative (CAMPCO) Bars Count: • Lines Wafer Panned Premium Cadbury’s
Dairy Milk &Variants, 5-Star, Milk Treat Perk Gems, Tiffins, Temptation & Celebrations • Nestle
Milky Bar, Bar One, Crunch, Kit Kat, Munch Nutties • Amul Milk Chocolate, Fruit ‘n’ Nut,
FUNDOO, Bindaaz, Almond Bar • Campco Campco Bar, Cream Krust, Turbo Treat

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11. MARKETING - PROMOTION OF

CHOCOLATES IN INDIA

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. I
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. On an average the wholesalers sell Rs
50000/month of Chocolates (all brands included). Also, 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. II 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. III 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 manufacturer’s 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.

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Marketing Mix in Industrial Sector

Medium size retailers sell chocolates of about Rs. 400 – Rs. 800 per week while big retailers
sell chocolate worth Rs1000 or more per week. Problems & Challenges in Indian Chocolate
Industry 1. 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. 2. 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 European 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 sometimes 3. 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. Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India
does not produce cocoa to any noteworthy extent but is a large consumer of chocolates.
Consumption of chocolates and other cocoa-based products, especially among the middle
class, has been growing. 4. TRANSPORTATION: Chocolate needs to be distributed directly,
unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a

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direct network in rural areas is a daunting task since the infrastructure is poor in India in rural
areas. 5. 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 neighbouring 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. External Factors affecting Growth of
Chocolate Industry in INDIA • Good monsoon ensures adequate availability of raw materials,
which are mainly agricultural in nature. Raw material prices have significant influence on
margins. • Government policies in terms of licensing, duties, movement of agricultural
commodities etc. also affect the introduction of products, time lag for a product launches,
taxes, excise, etc all influence the business. • Market growth driven by overall economic
growth and urbanization also contributes. An overall booming economy will consume tonnes of
chocolates because consumer spending increases. Also, the absolute number of consumers in
middle class & upper middle class increases.

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12. CADBURY’S INDIA LIMITED – A STUDY

CADBURY’S INTERNATIONAL Cadbury is a British multinational confectionery company

owned by Mondelēz International. It is the second largest confectionery brand in the world after
Wrigley's. Cadbury is headquartered in Uxbridge in Greater London and operates in more than
fifty countries worldwide. Cadbury is best known for its confectionery products including the
Dairy Milk chocolate, the Creme Egg, and the Roses selection box. Cadbury was established
in Birmingham, England in 1824, by John Cadbury who sold tea, coffee and drinking
chocolate. Cadbury developed the business with his brother Benjamin, followed by his sons
Richard and George. George developed the Bournvilleestate, a model village designed to give
the company's workers improved living conditions. Dairy Milk chocolate, introduced in 1905,
used a higher proportion of milk within the recipe compared with rival products. By 1914, the
chocolate was the company's best-selling product. Cadbury merged with J. S. Fry & Sons in
1919, and Schweppes in 1969. Cadbury was a constant constituent of the FTSE 100 from the
index's 1984 inception until the company was bought by Kraft Foods in 2010. CADBURY’S
INDIA LIMITED Mondelez India Foods Private Limited formerly Cadbury India Ltd, is a part of
the Mondelēz International group of companies and is in the business of creating delicious
moments of joy – by producing delectable chocolate confectionaries, gum and candy products,
and popular beverages and foods that include many of India's most popular and trusted food
brands. We strongly believe in delighting our customers by offering the best quality products
possible. Over the years we have won our customers' hearts, making us the market leaders in
the chocolate’s category in India. Our flagship brand Cadbury Dairy Milk (CDM) is considered

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Marketing Mix in Industrial Sector

the "Gold Standard" for chocolates - the pure taste of CDM defines the chocolate taste for the
Indian consumer. Our other much-loved brands include Cadbury Bournvita, CDM Silk,
Cadbury Choclairs, Gems, 5-Star, Perk, Bournville, Celebrations, Halls, Oreo, Tang and
Toblerone. Ranked 3rd amongst India’s Most Admired Companies by Fortune India in 2013,
Mondelez India Foods Private Limited is a part of Mondelēz International (NASDAQ: MDLZ),
the global snacking and food company and a spin-off from Kraft Foods Inc. Mondelēz
International is the world's largest chocolatier, biscuit baker and candy maker, and the second-
largest maker of gum. Mondelez India Foods Private Limited has been in India for over 6
decades, having started in 1948 as an importer of chocolates. Our work ethic, values systems
and quality standards make us an employer of choice in India. Our large community extends
into India's agricultural spaces. Since 1965, Mondelez India Foods Limited has pioneered and
enhanced the development of cocoa cultivation in India. For over two decades, we have
worked with the Kerala Agricultural University to undertake cocoa research and improve cocoa
yields. Our cocoa team works with farmers to improve incomes through best practices in all
aspects of cocoa cultivation - from planting to harvesting. Our efforts have touched the lives of
thousands of farmers.

Headquartered in Mumbai, Mondelez India Foods Private Limited has sales offices in New
Delhi, Mumbai, Kolkata and Chennai and six manufacturing facilities at Thane, Bengaluru,
Hyderabad, Induri (Pune), Malanpur (Gwalior) and Baddi (Himachal Pradesh).

OBJECTIVES AND VALUES:

 To make lots of chocolate.

 Improve the quality of their chocolate.

 To Survive in the market.

 Have loads of stores worldwide

 To be an ongoing company.

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Marketing Mix in Industrial Sector

 Achieve revenue growth of 20% per year

 Increase earnings by 15% annually

 Increase dividends per share by 7% per year

VISION:

Cadbury in every pocket” Our marketing strategy is aimed at achieving this vision by growing
the market, by appropriate pricing strategy that will create a mass market and to have offerings
in every category to widen the market.

MISSION:

"Cadbury’s mission statement says simply: ‘Cadbury means quality’; this is our promise. Our
reputation is built upon quality; our commitment to continuous improvement will ensure that our
promise is delivered.

LOCATION:

Cadbury’s manufacturing operations started in Mumbai in 1946, which was subsequently

transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to
promote modern methods as well as improve milk yield. In 1981-82, a new chocolate
manufacturing unit was set up at the same location in Talegaon. The company, way back in
1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans. The
parent company provided cocoa seeds and clonal materials free of cost for the first 8 years of
operations. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. In 1977, the
company also took steps to promote higher production of milk by setting up a subsidiary Induri
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Farms Ltd near Pune. In 1989, the company set up a new plant at Malanpur, MP, to derive
benefits available to the backward area. In 1995, Cadbury expanded Malanpur plant in a major
way. The Malanpur plant has modernized facilities for Gems, Eclairs, Perk etc. Cadbury also
operates third party operations at Phalton, Warana and Nashik in Maharashtra. These
factories churn out close to 8,000 tonnes of chocolate annually.

4 P’S OF CADBURY PRODUCT:

Categories/ Brands, Chocolate Bars, Count lines, Panned confectionery, Wafer chocolates,
Assorted Chocolates & Gift Chocolates, Sugar Confectionery, Food Drinks, Bournvita, Drinking
Chocolate Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In
India,Cadbury has the largest market share anywhere in the world and has been the fastest
growing FMCG Company in the last three years with a compound annual growth rate of 12.5
per cent. CHOCOLATES Category Brand Variants, Bars Dairy Milk, Plain, Fruit n Nuts, Double
Decker, Roasted Almond, Chunky, 5-Star, 5 Star Chrunchie, Milk Treat Chocolate, Orange,
Wafer Chocolate Perk, Perk XL Others Include Chocki Mint, Strawberry & Chocolate,
Premium/ Gift Chocolates Temptation Rum, Cashew, Almond & Orange Celebrations Various
Gift Packs Cadbury’s Dairy Milk (CDM): Cadbury’s Dairy Milk is the flagship brand of
Cadbury’s not only in India but worldwide. CDM is the single largest selling unit in India. It has
annual sales to the tune of Rs 200 crore. CDM not only accounts for 30 per cent of the total
chocolate market in value, but commands nearly 26 per cent in volume terms and close to 30
per cent of Cadbury’s annual turnover. Moving from a predominantly adult positioning in the
days of the legendary dancing girl ad, to the teens and the tweens, when the Cyrus Broacha
ads hit the airwaves, CDM has made a long sweet journey. In spite of the new categories
being explored by Cadbury, its star brand remains Cadbury Dairy Milk (CDM) which continues
to corner almost 30 per cent of the chocolate market.

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Marketing Mix in Industrial Sector

Cadbury’s Celebration Cadbury India launched its premium Celebrations range, which
contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. This gifting option
combines the pleasure of giving away dry fruits — which Indians traditionally consider a
premium, healthy gift — with chocolate. Cadbury now has 90 per cent market share in this
profitable segment. Product Revamping & Innovations Cadbury’s chocolate brands registered
double-digit growth in 2002, touching an astounding 19 per cent in the second half of that
calendar year. Getting the power brands right was the first priority, so genuine re-launches of
the products were made. However, the growth rate was declining after that. The growth went
down from 19 per cent in 1999 to 12 per cent in 2000 to single-digits, with seven per cent in
2001. If it staged a smart recovery to nearly 10 per cent in 2002, it was largely on the back of
Chocki and the revamped power brands. New Product Launches Cadbury 5Star Chomp A new
entrant under the Cadbury 5Star umbrella, Cadbury 5Star Chomp promises to offer consumers
an irresistible combination of chocolate, caramel and nougat of Cadbury 5Star, along with the
crunchiness of peanuts. Cadbury Glow Cadbury Glow is the new luxury gifting brand from
Mondelēz International (Cadbury) and is being introduced first in India With this launch, the
company combined its deep consumer insights, global expertise in chocolate and
breakthrough innovation capabilities to develop luxurious chocolate pralines with an indulgent
chocolatey filling that are superior in terms of taste and packaging. Cadbury Glow represents
the ideal expression of love and emotions for the special people in one’s life. PRICE With
quality comes price. As the quality of the products is high, and the beverages and Oreo
requires constant marketing to be on top, the price of Cadbury products is also high in some
cases, whereas in others it is very much reasonable. Products like perk, five star and eclairs
give the taste of Cadbury even at lower price. Dairy milk is considered to be a premium brand
of chocolates due to this positioning, but because of lower priced chocolates, it is also
accepted across various target segments. Cadbury has many varieties of products in the
chocolate segment and the pricing of each chocolate is different based on the type of customer
who is going to buy it. However, in all these, the Dairy milk brand is the clear winner. Priced in
high as well as low variants, the cadbury dairy milk has a position of gifting and hence is selling
high volumes even at higher prices. The cadbury celebrations pack in fact, sells in millions on
any festival or on celebrations. PHYSICAL DISTRIBUTION Chocolate needs to be distributed

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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 encompass 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 off take. The distribution of Cadbury is fantastic and
widespread. It is present strongly in all urban areas as well as A,B and C category towns. The
rural marketing of Cadbury is known to be weak but that is because demand there is also
weak. Cadbury follows the same mantra of FMCG marketing which is breaking the bulk. The
cadbury chocolate is manufactured in Bournville, England. Recently there was an
advertisement which promoted that Cadbury buys only the best cocoa beans from Ghana for
its chocolates. These chocolates are then distributed across the world. Cadbury is present in
200 or more countries. Once the chocolate reaches in bulk, it is broken down as follows.
Company >> C&F agent >> Distributors >> Retailers >> Consumers As you can see, due to
the channel, the distribution costs of Cadbury are high. But based on the demand in the
market, the costs were going to be high anyways. That is something which has to be taken into
consideration during the distribution of products. In the end, Cadbury has a very strong
presence in the market, and you can be rest assured, that if you want to have a cadbury, it will
be within 2 minutes reach from you in any of the local retail shops. PROMOTION Cadbury was
stuck with the controversy when worms were found in one of their chocolates.The image of the
company was shattered.The new packaging was just one part of the corrective measures the
company initiated.The major thrust was on educating its dealer’s and retailers on the correct
procedure for storage of chocolates. The company believed improper storage conditions
resulted in the chocolates becoming vulnerable to infestation by foreign bodies. The company
is continuing its efforts to provide air-conditioned storage units to its dealers and retailers.

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Cadbury appointed Amitabh Bachchan as its brand ambassador for a period of two years.
Indians love sweets. From Bengalis to Punjabis to South Indians, each of us want sweets.
Youngsters love sweet, and old people want a nibble from time to time. Thus, it is no surprise,
that a smart marketer like Cadbury has a tag line “Kuch meetha ho jaye” which means that lets
have something sweet. It is no surprise that people always have some cadbury’s stocked at
home. Or they gift a Cadbury dairy milk or celebrations to their loved ones. The promotions of
Cadbury for each of its products is different. For Bournville, Cadbury has kept the position that
you dont buy a bournville, you earn it. So basically, it is not on the consumer to buy the
bournville, someone has to gift him the same. For Cadbury celebrations.

he positioning is of gifting. Cadbury celebrations has a major commercial customer base,

where the chocolate is brought in bulk and given to employees, clients or vendors. Eclairs has
a low-cost position, Bournvita has a strong health positioning, Perk has a youngster position,
so on and so forth. Cadbury uses a combination of ATL as well as BTL marketing. The BTL
marketing of Cadbury is very strong with its hoardings, and standies as well as flex banners on
shops, corners, hotels etc. Thus, due to these activities, the brand recall is very high and
people will always remember a Cadbury whenever they are buying a chocolate. EARNINGS
SENSTIVITY FACTORS Cocoa bean prices: Domestic as well as international prices of key
raw material - cocoa have significant impact on margins. Excise duties: Changes in excise
levied on malt and chocolate influences end product prices and thereby volume growth as well
as margins. Changes in custom duties and foreign exchange fluctuation: As 20% of raw
material is imported, changes in custom duties & foreign exchange fluctuations have significant
impact on the final cost of the product. Competition from MNCs like Nestle as well as imported
brands. Increasing competition puts pressure on advertisement budget and margins. However,
on the positive side, it helps in expanding the market.

SUCCESS FACTORS OF CADBURY’S INDIA LTD.

1. Global management processes: India occupies a high-profile position in the global

organization, with advocates in regional and global headquarters. Global management has
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allowed the local operation a high degree of flexibility in growing the business,
understanding that asset utilization may be lower and returns slower to arrive, but
expecting volume share to compensate for lower margins in the long run.

2. Local management processes: The Cadbury India team is all-Indian and has a deep
understanding of local market dynamics. The business is set in a way that highlights
localization across all facets – driving the belief that the only way to succeed in India is by
developing localized business models. For example, the company tailored the chocolate
formula in India to prevent melting in the country’s open-air high frequency store
environment.

3. Customized business models: Local management has set up systems to test and
develop products from the ground up with specialized interlinked cells that execute
innovation and market testing hand-in-hand. Cadbury India is known as a key product
innovator. Besides Dairy Milk, the entire Cadbury product portfolio in India has been
developed locally to suit Indian consumer tastes. Packaging, marketing and distribution
have all been tailored to local market conditions.

4. Royalty Structure: Royalty to Cadbury Schweppes Plc. is around 1 per cent of the
turnover. But with that, the company gets unlimited access to latest technology, new
products and so on. They can also introduce new products from the parent, if it is suitable
for Indian market.

5. Subtle reengineering of raw material mix led to cost savings: Cadbury has reduced its
dependence on cocoa, thus lowering its exposure to volatile raw material prices as well as
cutting costs. It appears that they have subtly altered its recipe by using less of costlier
cocoa and more of milk and sugar. Cadbury's launch of Perk has also contributed
significantly in reducing the proportion of cocoa in the overall raw material mix.
Consequently, Cadbury saved about Rs.94mn (1.8 percent of net sales) in FY1999.
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13. NESTLE INDIA LIMITED – A STUDY

NESTLE INTERNATIONAL Nestlé S.A. is a Swiss multinational food and beverage company
headquartered in Vevey, Switzerland. It is the largest food company in the world measured by
revenues. Nestlé’s products include baby food, bottled water, breakfast cereals, coffee and
tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine
of Nestlé’s brands have annual sales of over CHF1 billion (about US$1.1billion), including
Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestlé has 447
factories, operates in 194 countries, and employs around 333,000 people. It is one of the main
shareholders of L’Oreal, the world’s largest cosmetics company. Nestlé was formed in 1905 by
the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George Page
and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé. The
company grew significantly during the First World War and again following the Second World
War, expanding its offerings beyond its early condensed milk and infant formula products. The
company has made a number of corporate acquisitions, including Crosse & Blackwell in 1950,
Findus in 1963, Libby’s in 1971, Rowntree Mackintosh in 1988, and Gerber in 2007. Nestlé has
a primary listing on the SIX Swiss Exchange and is a constituent of the Swiss Market Index. It
has a secondary listing on Euronext. In 2011, Nestlé was listed No. 1 in the Fortune Global
500 as the world’s most profitable corporation. With a market capitalization of US$233 billion,
Nestlé ranked No. 9 in the FT Global 500 2013. NESTLE INDIA Nestlé India is a subsidiary of
Nestlé S.A. of Switzerland. With eight factories and a large number of co-packers, Nestlé India
is a vibrant Company that provides consumers in India with products of global standards and is
committed to long-term sustainable growth and shareholder satisfaction. The Company insists
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on honesty, integrity and fairness in all aspects of its business and expects the same in its
relationships. This has earned it the trust and respect of every strata of society that it comes in
contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst
the 'Top Wealth Creators of India'. Nestlé India manufactures products of truly international
quality under internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR,
KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also
introduced products of daily consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk,
NESTLÉ Dahi and NESTLÉ Jeera Raita. Nestlé India is a responsible organization and
facilitates initiatives that help to improve the quality of life in the communities where it operates.

OBJECTIVES AND VALUES:

Our objective is to be the leader in Nutrition Health and Wellness, and the industry reference
for financial performance, trusted by all stakeholders. We believe that leadership is not just
about size; it is also about behavior. Trust, too, is about behavior; and we recognize that trust
is earned only over a long period of time by consistently delivering on our promises. These
objectives and behaviors are encapsulated in the simple phrase, “Good Food, Good Life”, a
phrase that sums up our corporate ambition. We are seeking to achieve leadership and earn
that trust by satisfying the expectations of consumers, whose daily choices drive our
performance, of shareholders, of the communities in which we operate and of society as a
whole. We believe that it is only possible to create long- term sustainable value for our
shareholders if our behavior, strategies and operations are also creating value for the
communities where we operate, for our business partners and, of course, for our consumers.
We call this “Creating Shared Value”. We are investing for the future to ensure the financial
and environmental sustainability of our actions and operations: in capacity, in technologies, in
capabilities, in people, in brands, in R&D. Our aim is to meet today’s needs without
compromising the ability of future generations to meet their needs, and to do so in a way which
will ensure profitable growth year after year and a high level of returns for our shareholders
and society at large over the long-term.

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MISSION:

Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good
Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a
wide range of food and beverage categories and eating occasions, from morning to night.
VISION To be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen, preferred employer,
preferred supplier selling preferred products.

LOCATION:

After more than a century-old association with the country, today, Nestlé India has presence
across India with 8 manufacturing facilities and 4 branch offices. Nestlé India set up its first
manufacturing facility at Moga (Punjab) in 1961 followed by its manufacturing facilities at
Choladi (Tamil Nadu), in 1967; Nanjangud (Karnataka), in 1989; Samalkha (Haryana), in 1993;
Ponda and Bicholim (Goa), in 1995 and 1997, respectively; and Pantnagar (Uttarakhand), in
2006. In 2012, Nestle India set up its 8th manufacturing facility at Tahliwal (Himachal
Pradesh). The 4 Branch Offices located at Delhi, Mumbai, Chennai and Kolkata help facilitate
the sales and marketing activities. The Nestlé India’s Head Office is located in Gurgaon,
Haryana.

4 P’s OF NESTLE:

The Marketing mix of Nestle discusses the 4P’s of one of the strong FMCG companies of the
world. The Nestle marketing mix shows Nestle has a strong product line which boosts its
marketing mix. Below are the products, price, placement and promotions of Nestle. PRODUCT
There are 4 different strategic business units within Nestle which are used to manage various
food products. Beverages – One of the most known coffee brands Nescafe, belongs to the
house of Nestle and is one of the cash cows for Nestle. However, it is not the biggest cash
cow. Nestle has a worldwide distribution and has many different variants. Looking at India,
nestle has also launched Nestea. Milk and Milk products – Nestle every day, nestle slim and
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Nestle Milk maid are some of the milks and milk-based products from the house of Nestle.
Prepared dishes and cooking aides – Nestle has a third category of products which comes into
prepared dishes and cooking aides. The major cash cow of Nestle lies in this segment, which
is Maggi Noodles. Probably one of the most widely sold ready to cook noodle brands is Maggi.
Maggi has a fantastic taste and quality. Thus, it was not a surprise, that Nestle expanded the
Maggi brand to create an umbrella of different products like Maggi pasta, Maggi sauce, Maggi
cubes etc. The maggi range contributes vastly to the bottom line of Nestle. Chocolates –
Nestle has some popular chocolate products, most popular being Nestle Kitkat, Munch, Milky
bar, Eclairs and Polo. The newly introduced Alpino is targeting the gifting segment in response
to various chocolates like Dairy milk and Bournville by Cadbury. The chocolates segment of
Nestle is a star, where the competition is high and the expense is high but at the same time the
market size is huge as well. As we can see, two major brands of Nestle are a very high
contributor to its Brand equity – Nescafe and Maggi. These are two brands sold across India in
small as well as big shops and super markets. There have been many competitors for these
products, like Bru for Nescafe and Top ramen and Sunfeast Yippie against maggi. The
appreciable factor in Nestle is that quality maintenance of products is upto mark and there are
hardly any complaints about Nestles products in the market. This is a major achievement for a
company which relies majorly on food products.

New Product Introduction & Innovations the Company sustained momentum during the year by
driving distribution through innovative consumer promotions and trade offerings and supporting
key price points. High temperatures are a typical characteristic of Indian subcontinent.
Chocolate starts melting at such high temperatures thus making chocolate unfit for
consumption. Hence, nestle introduced an innovative the new KITKAT SENSES- a perfect
balance of crisp wafer coated with slow churned chocolate. This slow churned recipe is made
using Cocoa mass from the finest beans, blended with specially selected ingredients. The
blend is then processed with utmost care, including a churning process lasting 12 hours, to
deliver a luxuriously rich and smooth tasting product that melts in your mouth. Available in two
variants: KITKAT SENSES Milk and KITKAT SENSES Dark. PRICE The price is dependent on
the market of each individual products. For example, Nescafe and Maggi being the clear
leaders are priced with higher margins for the company as compared to competition. This is

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because the product quality is good enough and a bit of skimming price will not cause the
customer to switch brands. The strength of pricing for Nestle comes from its packaging or
consumption-based pricing. For Nescafe as well as Maggi, Nestle offers a lot of sizes and
package options. In supermarkets, you can even find a 16 packet maggi whereas in small
retail shops, you can find 5 Rs maggi. Thus, with the variety available, customer can make his
own choice based on his consumption. In other products like Kitkat and Munch, due to tough
competition from other companies, Nestle offers competitive pricing. You will find that nestle
will be similar priced to many of Cadbury’s Products in the chocolate segment PHYSICAL
DISTRIBUTION Nestle follows the FMCG strategy of distribution which involves breaking the
bulk. The typical distribution strategy of Nestle is as follows. Manufacturing >> C & F agent >>
Distributors >> Retailers >> Consumer Manufacturing >> Bulk buyers >> Consumer These are
the two different forms of distribution which Nestle has. It is typical of any FMCG company.
However, the Nestle channel is known to be strong with a good marketing and sales network
for channel distribution. On top of it, Nestle regularly introduces trade discounts and various
tactics to keep the channel motivated. The major challenge is in the distribution of Maggi which
is the most in- demand product along with Nescafe. Due to these two products, Nestle is able
to drive other products in the market as well. Thus, on purchase of one weak product, the
distributor might get a discount on the stronger product or vice versa.

The challenge for Nestle is in the chocolate segment where it faces stiff competition from
Cadbury and hence selling the chocolates becomes difficult. Kitkat might have its own brand
positioning, but it is not better than Dairy milk. Thus, converting retailers to sell Nestle instead
of Cadbury is the toughest task for Nestle. This is converted mainly through promotions.
PROMOTIONS One of the most widely known tunes is the Nescafe tune. It was one of the
best advertising campaigns and was launched at least 2 decades back. However, that
campaign brought Nescafe strongly in the market. On the other hand, Nestle’s brand was
pushed by the excellent product quality of Maggi and the witty and innovative campaigns of
Maggi. Where Nescafe focuses on value and the good things in life, Maggi focuses on
moments you had with your Maggi. The recent campaign was completely focused on your
maggi story, where people had to come out with various innovative ways that they had their
maggi. Promotions for other products too is done smartly. Kitkat focuses on “Take a break”

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and has done some good marketing for the same. Kitkats website too is very innoative and
shows nothing but asks the visitor to take a break and have a Kitkat. The major push expected
of a FMCG company is in sales promotions at the ground level. This is where Nestle really
rocks. Nestle focuses on its strength which is Maggi, Nescafe and Kitkat which are the most
promoted brands in the market on ground level. Besides this, Nestle regularly uses TVC’s and
ATL marketing. It is also present online through some smart creative. Overall, Nestle is a
brand which has strong products as well as strong marketing, and hence the brand has a very
high brand recall value.

KEY FACTORS OF GROWTH OF NESTLE:

Competitive advantages, Unmatched product and brand portfolio, Unmatched R&D capability,
Unmatched geographic presence, People, culture, values and attitude True competitive
advantage comes from a combination of hard-to-copy advantages throughout the value chain,
built up over decades. There are inherent links between great products and strong R&D,
between the broadest geographic presence and an entrepreneurial spirit, between great
people and strong values. Growth drivers, Nutrition, Health and Wellness, Emerging markets
and Popularly Positioned Products, Out-of-home, Premiumization These four areas provide
particularly exciting prospects for growth. They are applicable across all our categories and
around the world. Everything we do is driven by our Nutrition, Health and Wellness agenda,
Good Food, Good Life, which seeks to offer consumers products with the best nutritional
profile in their category’s Operational pillars, Innovation & Renovation Wherever, whenever,
however, Consumer engagement, Operational efficiency Nestlé must excel at each of these
four inter-related core competences. They drive product development, renewal and quality,
operational performance, interactive relationships with consumers and other stakeholders and
differentiation from our competitors. If we excel in these areas, we will be consumer-centric, we
will accelerate our performance in all key areas and we will achieve excellence in execution.

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14. COMPETITIVE ANALYSIS OF CADBURY

AND NESTLE

SWOT ANALYSIS CADBURY

STRENGTHS:

 Distribution Network

 Market Share

 Aggressive Marketing

 Very strong brand equity in India.

 Better market penetration.

WEAKNESS:

 Little penetration in the rural sector.

 Poor technology in India compared to current international technologies.

 Limited Key products, only one central brand (CDM).

OPPORTUNITIES:

 Increasing per capita national income resulting in higher disposable income.

 Growing middle class and growing urban population.

 Increasing gifts cultures.

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 Substitute to “Mithais”

THREATS:

 Rise in the cost of chocolate and dairy products.

 Entry of many foreign players in the Indian Confectionary market, which are giving higher
margins to the retailers.

 Changing consumer trends.

SWOT ANALYSIS NESTLE

STRENGTHS:

 Strong distribution network.

 Strong R&D

WEAKNESS:

 Raw material supply

 volatile prices.

 Chocolates - comparatively small business unit

 Lack of penetration of chocolates in the rural market

OPPORTUNITIES:

 Low penetration, consumption.

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 Launch of brands from international portfolio.

 Growth in international & emerging markets.

THREATS:

 Foreign imports.

 There exists no brand loyalty in the chocolate market and consumers frequently shift their
brands.

 Changing consumer trends.

15. MARKETING MIX CADBURY PRODUCT

Product: Cadbury India Limited (CIL) confectionary products include Dairy Milk, 5 Star,
Eclairs, Perk, Halls, Bytes and Gems which are the largest selling brands in their segments.

Pricing: Cadbury’s has launched various products which cater to all customer segments. So,
every customer segment has different price expectation from the product. Therefore,
maximizing the returns involves identifying right price level for each segment, and then
progressively moving through them. e.g.: Dairy Milk Rs.5, Perk Rs. 10, 5 Star Rs. 5 & Rs. 10,
Fruit and Nut Rs. 22, Gems Rs. 5 & 10, Break Rs. 5, Nutties Rs. 18.

Physical Distribution - Place: Cadbury's distribution network used to encompass 2100

distributors and 450,000 retailers.

Promotion: Celebrities endorsements. The big factor that has pushed up cdm sales is the
Amitabh Bachchan campaign. Cadbury appointed Amitabh Bachchan as its brand
ambassador. Cadbury product are marketed aggressively in the market.

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16. MARKETING MIX NESTLE PRODUCT

Products: are Kit-Kat, Munch, Milky-bar, Charge, Classic, Polo. Kit-Kat is their premium brand
in chocolates.

Pricing: Nestle sets prices of their products according to the market demand as low as
possible because nestle is the trend setter in the market. In line with Cadbury’s offerings
Incentive schemes – eg. Maha munch give more value for the same price Priced at key price
points like Rs.5

Physical Distribution – “Place” General FMCG distribution structure. Strong coverage in

urban areas, developing in rural. New Regional Sales Offices to increase width and
penetration and focus in rural areas.

Promotion: Brand ambassador- Rani Mukherjee for munch (targeting youth) ADVERTISING -
Decreased dependence on children’s TV channels over recent years 33% of total industry
spend but near equal spend on each brand with rival offerings from Cadbury.

17. COMPETITIVE ASSESSMENT

Food feeds keep share markets as well as consumers perennially interested. At first, it was the
cola giants that attacked each other using their ad campaigns as daggers, and now the
battlefield is fast becoming accustomed to the chocolate giants – Cadbury and Nestle.

These are both global brands which have been competing neck and neck over market share
for decades. However, their approach to advertising was never as direct as it has become in
the last three years.

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Taking a lesson out of the cola giants’ battlebook, nestle is waging nothing short of a public
war against Cadbury through its ad campaigns.

Cadbury has, without a doubt, always been seen as the market leader. It leads the pack in the
Rs. 4,000-crore branded chocolate sector in India

Even though several brands such as Amul and Campco tried to break into the market, none of
them succeeded in shaking Cadbury’s grip

Nestle is the only real competition Cadbury has had in its long run as market leader. 72% 24%
3% 1% Market Share Cadbury (72%) Nestle (24%) Amul (3%) Others (1%).

18. SUGGESTION AND RECOMENDATIONS

Due to increasing overall cost in Chocolate Products everywhere, cost format should be made
as such that it is affordable to each and everyone in the society.

In this we also found that if the demanded brand is not available, so at that time the customers
switch over the brand of the chocolate so, here the company should build up the healthy
distribution channel by which company can attract the customers and company lose the fear
from the market.

Company should concentrate more on television for advertisement.

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19. CONCLUSION

 Overall people like to eat Cadbury brand rather than nestle

 The Cadbury Dairy Milk brand has evolved into a Megabrand incorporating arrange of
products each with their own identity.

 The strategy involved a packaging and range refreshment strategy which has resulted in a
unified innovative Dairy Milk brand, Having exceeded initial sales targets by a considerable
margin, the strategy can be considered a success!

 There is an immense scope for chocolate industry in India.

 Indian chocolate industry is unique mix with extreme consumption patterns, attitudes,
beliefs, income level and spending.

 Understanding consumer preferences and demands is the key to growth.

 Economical distribution using proper supply chain management is necessary.

 The Indian Chocolate Industry is destined to grow and will do so in the future.

 Most people prefer dairy milk of Cadbury due to its flavor taste quality and image and due
to its hard form, some people often like to hear a chocolate with good quality taste crunch.

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