Market and business analysis of Cadburys

Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. The company employs around 50,000 people and has direct operations in over 60 countries, selling their products in almost every country around the world. The company creates brands people love, brands like Cadbury, Trident and Halls. The company heritage starts back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then Cadbury have expanded the business throughout the world by a program of organic and acquisition leg growth. On 7 May 2008, the separation of Cadbury confectionery and Americas Beverages business was completed creating Cadbury plc with a vision to be the world’s Biggest and Best confectionery company.

Mission Statement

“Cadbury means quality” this is the company promise. The company reputation is built upon quality; the company commitment to continuous improvement will ensure that the company promise is delivered. Cadbury has established itself as a company of fairness and integrity, which always attempts to operate as a socially responsible business.

Value

Performance

Cadbury is passionate about winning. The company competes in a tough but fair way. The company is striving, hardworking and makes the most of the abilities. The company is prepared to take risks and act with speed.

Quality

Cadbury put quality and safety at the heart of all of the activities such as product, people, partnerships and performance.

Respect

Cadbury genuinely care for the business and the colleagues which like listen, understand and respond. The company is open, friendly and welcoming. The company embraces new ideas and diverse customs and cultures.

Integrity

Cadbury always strive to do the right thing. The company does the business with honesty; openness and being straight forward characterize the way.

Responsibility

Cadbury take accountability for the social, economic and environmental impact. In this way the company aims to make the business, partners and communities better for the future.

Cadbury Business Principles are the code of conduct of the company and also take account of global and local cultural and legal standards. They confirm the company commitment to the highest standards of ethics and business conduct. The core purpose of the company is creating brands people love. The core purpose captures the spirit of what the company is trying to achieve as a business.

Market Share

By participant, the market is relatively fragmented, with the five largest confectionery companies accounting for around 40% of the market. There are a large number of companies which participate in the markets only a regional or local basis. Cadbury compete against multinational, regional and national companies.

The graph shows that Cadbury is the second highest of the total confectionery in the market share. Halls is the largest brands in candy of Cadbury. Cadbury have number one and number two confectionery market position in 20 of the world’s 50 largest confectionery markets by retail sales value.

Financial statement

The graph shows the financial situation of Cadbury from 2006 to 2009. As we can see in the graph, the revenue is reached ¿¡5975 million is year 2009 which is slightly increase about 5% from year 2008. In operating income, year 2009 is the highest compare to previous year which is ¿¡507 million. Last but not least, year 2009 having 9% of the operating margin which is slightly increase from year 2008. As a conclusion, In year 2009, the performance is pretty well compare to the previous year due to there a keep increase since year 2006 to 2009.

PESTLE implication

Political

The political deals with government influence. The main laws that will affect Cadbury’s are the consumer protection law. These are the laws and the recent changes in food labeling. The food labeling shouldn’t be too influence as Cadbury’s has label all their goods properly to begin with. Change in manufacturing law will also greatly influence Cadbury’s as the company may have to change the way to product the cereal. This could lead to the introduction of new mechanical equipment being required or more thorough checks on the current equipment. If new equipment is required if could prove to be very expensive.

The Weight and Measures Act, this act should not affect Cadbury’s since the company have all the equipment and scales used should already be at that of the highest standard.

The Trade Description Act, this again should not affect Cadbury’s due to all the labeling on the products should be correct and thorough giving all the ingredients.

The Sale of Good Act, these state that Cadbury’s should not mislead the consumer. These are currently three conditions. If the government was to introduce a few more it could prove to affect Cadbury’s.

Economic

The state of the economy is the main factor. It the country was to go into recession the consumer spending would also drop due to the unemployment. The recession would bring down the sales of a lot of goods mainly the expensive things, which are not necessity. The current economy is well. The interest rates are low and consumer spending is very high. Other economic factor that could affect Cadbury’s launching a product would be a rise in inflation. This is a rise in price over time.

Social

If the population size decreased then Cadbury’s be less people to buy the products therefore less profit. · If peoples lifestyles changed. For example, nowadays more people wanting to get fit and lose weight, then they will stop eating chocolate and spend their money on gym memberships and others. This means that Cadburys profits will decrease.

Technological

An increase in capital expenditure will affect Cadbury’s. For example, more up to date equipment would mean that the goods where produced quicker and cheaper but would also result in job losses. In research and development, keep developing new products to keep up with competition and customer needs.

Legal

More legislation in place to make sure that the workplace is safe and the worker is better protected. Expensive costs to Cadburys to implement

Environment

Cadbury launched a corporate social responsibility Web site called DearCadbury.com, which provides consumers information on ethical sourcing, responsible consumption and the environment. The site features Cadbury’s 2007/08 Corporate Responsibility and Sustainability report, which revealed that the company has reduced carbon emissions almost 4 % to date; Cadbury is aiming for a 10 % reduction by 2010. As part of Cadbury’s “Purple Goes Green” program, the company committed to a 50 % absolute reduction in carbon emissions by 2020. Cadbury also reported that it has met its 2007 goal of reducing water use by 10 %

Competitor’s situation and SWOT analysis

Cadbury’s major competitors are Thorntons, Lindt, Lindor, Nestle, Master food (Mars) and others. They are competing directly with Cadbury. Nestle is one of the Cadbury’s main competitor in the market.

Nestle is one of the world’s largest food manufacturer, Nestlé’s headquarters in Switzerland and based in 200 countries worldwide. It is renowned as the world’s leading nutrition and health based company. Nestle grows is product line through innovation as well as renovation and maintains a balance on its geo-environmental activities and product lines. They have 253,000 employees around the world.

Cadbury’s SWOT

Strengths

The largest global confectionery supplier, with 9.9% of global market share.

High financial strength

Strong manufacturing competence, established brand name and leader in innovation.

Advantage that it is totally focused on chocolate, candy, chewing gum, unique understanding of consumer in these segment.

Successfully grown through its acquisition strategy.

Weakness

The company is dependent on the confectionery and beverage market.

Other competitors have greater international experience.

Opportunities

Expand into new markets.

Increase share through targeted acquisitions.

Key to survival within the FMCG market is increasing efficiency and reducing costs.

Innovation Is key driver.

Threat

Worldwide, there is an increasingly demanding cost environment, particularly for energy, transport, packaging and sugar.

Competitive pressure from other branded suppliers.

Social changes.

Nestlé’s SWOT

Strengths

Globally recognized as one of the largest and powerful food producer, covering almost every country.

Quality is a vital element regarding nestle products.

Strong internal growth and emphasis on innovation internally.

Powerful brand positioning in the consumers mind.

The decentralized culture in the organization encourages employees.

Weakness

The immense diversification portfolio of the firm makes it impossible to run every division smoothly.

Retailers do not get set high margin to increase more in sales.

Transportation as well as storage problem.

Opportunities

Invest in snacks that would further diversify its product.

Provide incentives to the retailers to increase sales volume.

Open café that would exclusively provide Nestle products.

Middle class share in most of the economies are growing much larger.

Threats

Pollution of product should be regarded strictly.

The company has not so pretty history with the FDA.

Tough market with a tougher competitor for gaining market share.

Market is quite mature and the competitors specialize in a certain product that can hit hard on Nestle.

In comparison of Cadbury’s SWOT and Nestlé’s SWOT,

Cadbury Strength against Nestle Weakness

Cadbury is a brand that is a leader in innovation of products, that focuses on candy, chocolate, that satisfies the various taste of consumers whereas Nestle has a wide range of portfolio of products that exceeded the management skill and man power to manage a smooth and effective management of product. The advantage of Cadbury in the market share has given them the priority in determining the price of their products, whereas the price of Nestle product is depending on the market that they venture and they cannot set price of product that is too high that is not the interest of consumer. Nestle has also problem in locating and distributing the product due to developing countries that has poor communication and network skill between the people.

Cadbury Weakness against Nestle Strength

Cadbury’s main weakness is its international inexperience in distributing and expanding its product, whereas Nestle has the most experience in distributing and expanding of their product due to the coverage of its product is over the world. Other Cadbury’s weakness will be the dependant of the company on too little product line which is beverages and confectionery product unlike Nestle which having lots of the product line like drinks, snack and food that can generate the profit made.

Opportunities of Cadbury and Nestle

Cadbury can venture into new market to diversify their products into different sector is snack food. Nestle has also look into opening new Nestle café that specialize in selling Nestle products and also promoting new products. Cadbury has to come up with more creative chocolate products to maintain its competitiveness in the market. Nestle should also reduce the portfolio of brands that cost losses to the company and focuses the skilled managers on brands that are generating sales.

Threats that is face by Cadbury and Nestle

Manufacturing of Nestle product has produce wastage of energy, Nestle has to improve their technology in reducing the pollution to the environment. Cadbury is also widely exposure to competition from other brands of chocolate such as Hershey’s because of new product that is more innovative. Chocolate ingredients increase in price will also cost Cadbury in expenditure to purchase the product. Nestle has to improve their brand in the breakfast cereal market because it has been claim to be containing fake health benefits, more cash has to be waste to reposition their product.

Market objective

Environment objective

Specific

Aim to reduce carbon emissions

Reducing water use

Measureable

Reduce the carbon emissions by 14%

Reducing water use by 12%

Achievable

Improve the manufacture technology

Realistic

To invest new technology to save production cost.

Chocolate industry have brighten future in UK and Cadbury is leading industry therefore Cadbury is able to invest new technology.

Timely

In year 2012, the carbon emissions has reduce 18% and reduce water use 14% compare to previous years.

In this objective is aim to reduce carbon emissions and reducing water use. Due to the issues of carbon emissions can be reduce their cost of production such as replacing air compressors can be saving electrical cost and reduce the water consumption in their steam used during processing and for cleaning. To reduce water consumption, company must look for new technology of machine to reduce the water consumption. Other than that, reduce the resources of these can be helping company to save cost and protect of natural resources. In the measurement, Cadbury aim to reduce the carbon emissions by 14% and reducing water use by 12%. To achieve this objective, company must be improve the manufacture technology such as membrane technology to reduce the natural resources. Due to the background of the company, Cadbury are able to invest new technology to reduce the resources and it can be save cost when they producing chocolate. By the year of 2012, Cadbury aim in reduce 28% of carbon emissions and reduce 14% of water use compare to previous years.

Societal

Specific

Introduce new product

Create new lifestyle for Children

Measureable

Introduce the diet chocolate

Create more children activities

Achievable

Strong human resources

Improve R&D department

Realistic

The improvement of CSR program.

Timely

In year 2012, increase the brand awareness.

As for societal, Cadbury will introduce more new product in market. Children are one the largest market for Cadbury, Cadbury planning to create a new lifestyle for children. By measure, New product such as diet chocolate have potential of getting large market, the main reason is due to local citizen are getting more concern about the health. Diet chocolate is suitable for citizen concern their health. As for lifestyle of children, create more activities for children, activity such as education will help children learn more knowledge. To achieve the target, Cadbury must have strong human resources, only good employee will provide the better performance. R&D department also must improve, to have more sales, product for health are very important such as diet chocolate. In realistic, improvement of CSR program is to gain more believe and loyalty from purchaser. By estimation, year 2012 will achieve the objective of societal. Brand awareness will be increase by the support of this objective.

Financial objective

Specific

Growth of revenue in UK

Increase total confectionery share gain

Measureable

To growth 5% of revenue compare to previous years

Growth in global market share and increase share in the UK by 50 bps

Achievable

Carry out a number of advertisements in the market and online.

Realistic

The revenue is keep increasing compare to previous years.

Timely

In year 2012, the revenue has to be 15% increase compare to year 2009.

In this objective is aim to growth of revenue in UK and increase total confectionery market share. To increase the revenue and market share, Cadbury must carry out more advertisements such as produce different type of packaging to target public event. For examples, in Christmas Cadbury produce hamper for consumers as a Christmas gifts to exchange gifts with friends. In this measurement, Cadbury aim to increase 5% of revenue and increase market share in global market by 50 bps in UK. To achieve this objective, Cadbury organize more events to promote their new packaging such as Christmas hamper on the period before Christmas. In this event, Cadbury could increase sales. Due to the capital of company, Cadbury is able to produce new packaging to their product. By year of 2012 the revenue could increase 15% compare to previous years.

Marketing strategy

Product

Cadbury dairy milk is made from real chocolate. The ingredients for the chocolate are cocoa butter and there is a glass and half full cream daily milk in every 200 grams of Cadbury daily milk chocolate. Cadbury purchase 65 million liters of fresh milk each year to make Cadbury daily milk chocolate.

Price

Price is very important in the marketing mix. The price changed for a chocolate bar can be affect whether a consumer will buy it and the level of sales can determine whether or not Cadbury Schweppes will make a profit. Price is also can be affected by factors such as the state of economy, what competitor are doing. The stage reached in product life cycle and above all what price the market will accept. Form the marketing point of view this is what matters.

Place

Cadbury products are produced at the chocolate factory in Bourneville in Birmingham. After the chocolate is produced, it will go through all quality check and transported to the stockrooms. The following, Cadbury sells the products to shops that deal with beverage and confectionery such as convenient store, super store, petrol station, and others. This kind of distributions can make consumer easy to find the product. Cadbury produces chocolate for more than 200 countries so that they have a chance to enjoy it as well and make profit. Because of this, Cadbury have a wide range of consumer around the world.

Promotion

The purpose of promotion is to communicate directly with potential or existing customer, in order to encourage them to purchase dairy milk and recommend it to others. There is various ways to promote the product such as TV advertisement, banner on the internet, magazine and newspapers.

Forecast and Implication

3-years forecast and budget

2009

2010

2011

2012

Sales

5975

6273.75

6587.44

6916.81

Cost

3210

3370.5

3539.03

3715.98

Profit

509

534.45

561.17

589.23