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Cadbury India Strategic Management

Essay by   •  July 20, 2011  •  Case Study  •  2,748 Words (11 Pages)  •  2,376 Views

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INTRODUCTION

Despite the fact that Indians have a strong affinity for sweets, the size of the domestic confectionery is small on the account of traditional consumer tastes and habits. The chocolate market in India is a niche market penetrated largely in urban areas and per capita consumption is low compared to those in developed countries of the West. Despite the economic growth, a very large proportion of India's over 1 billion population continue to live in extreme poverty. There is serious disparity between the urban and rural population. (CIA World Factbook, The World Bank)

The confectionery market in India has undergone major changes and growth especially since the opening up of the economy, this has resulted in its steady growth and gradual transformation from a commodity market to a branded products market dominated by multinational companies.

The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes,

beliefs, income level and spending.

MAJOR ISSUES AT PLAY

1. Lack of proper infrastructure and low per capita income level of nearly 50% of the total Indian population.

2. Market of sweet meats in India pose a strong competition to the chocolate industry

3. Competition from other imported chocolate brands such as Mars and Snickers had outpaced those of Cadbury's and Nestle because of better margins made available to retailers.

4. Breaking into the rural markets

5. Environmental issues such as high humidity

These issues were strategic for Cadbury India because how they have being handling them affected the long term decisions of the organization, its scope, strengthen its competitive advantages, help it respond appropriately to the changes in the business environment, built its capability and profitability (stakeholders expectations).Scholes et al (2008).

ANALYSIS OF ISSUES

SWOT

Strengths

1. Cadbury is a strong brand name with at least 9.9% global share of the chocolate industry. In India, it has become a generic name for milk chocolates. The pure taste of CDM is what Indians crave for when they think of chocolates.

2. It has a strong product mix and uses superior quality ingredients to drive the taste. It is also key to note Cadbury has being able to make the taste of chocolate tailor made to region specifics. The Cadbury India team is all-Indian and has a deep understanding of local market dynamics. 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.

3. It also has the advantage of being the first entrant into the Indian chocolate market and still enjoys 70% of the market share to date.

4. It has easy access to new technology, ideas for new product development, techniques for marketing the products

5. It has a strong support from the parent company Cadbury Schwepps.

Weaknesses

1. Other competitors have greater international coverage.

Opportunities

1. The Indian rural market can be penetrated and developed as a future market through affordability and availability. The future of FMCG in India looks bright, regardless. There is rising household incomes and spread of modern retail (distribution network).

2. Westernization is an increasing trend in Indian lifestyle. Considering the market of sweetmeats this has been of strategic relevance to Cadbury. The idea of giving chocolates as a gift has been promoted and is now seen as trendy. The launch of lower priced smaller bars and positioning of chocolates as a substitute to the traditional sweets as also boosted this. This is also because chocolate which is considered to be an elitist food has caught on the fancy of buyers looking for a lifestyle item at an affordable cost.

Cadbury has been able to position its products to be bought, consumed and accepted as gifts at all occasions and festivals. It 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.

India's chocolate market is still viewed globally as hugely untapped. Given the mammoth population, it is surprising that per capita chocolate consumption is very low at 20g per person as compared to 7kg in developed countries. There is still an untapped potential of about 700 million consumers.

3. The shopping mall culture is a new and quickly growing retail concept in India encouraging impulse purchasing and convenience.

Threats

1. Indians have strongly ingrained tradition and tastes especially for their traditional sweetmeats. Thus this serves as direct competition for consumer stomach shares. Sweetmeats in India have a great cultural significance as they are accepted as a mark of hospitality in almost every section and region. Traditional sweets can also be considered healthier because they are not made with stabilizers, emulsifiers or chemical preservatives.

2. Indians are notoriously conservative about food and many strictly follow traditional ethnic and dietary habits which is a barrier to the growth of this industry. The generally, higher prices also put them beyond reach for a large proportion of the population. In rural areas price, poor infrastructure, lack of exposure to new products and a stronger traditionalism still pose problems.

3. Competition from other brands, including foreign players, some who are offering similar product lines. Imported chocolates are now in growing demands with their sales growing at a 100 percent as compared to the 25-30percent growth of local,made in India brands.

4. Duplicacy of brands is high in the confectionary industry.

5. Consumers are becoming choosier especially with the wide range of chocolate brands available.

6. Social changes- Changes in consumption habits and lifestyles including calorie counting for healthier lifestyles.

7. Low per capita income.

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