EXECUTIVE SUMMARY - marketing
.0 - EXECUTIVE SUMMARY1
This report has been constructed to compare the marketing propositions used by the two brands 'Dairy milk' and 'Kit-Kat'.
The type of market that both companies compete in can be classified as continuously growing. Busy consumer lifestyles are increasing demand. The chocolate confectionery industry accounts for the majority of the market, being worth an estimated £3.49 billion, representing the total confectionary market worth £5.18 billion.
Kit-Kat is mainly consumed by students and young adults on-the-go. Dairy Milk is consumed by mature adults for indulgence and pleasure. The confectionery industries are highly competitive. Cadburys, Mars and Nestle dominate the UK market as major players.
The UK chocolate confectionery market is governed by the same stringent legislations as the food industry overall. Child population is declining therefore manufacturers need to target promotional activities at older age group.
This report provides recommendations such as the following for Dairy Milk;
- Branch out to other markets
- Buy large amounts of stock to compensate for low stock supply therefore, not having to be weather dependant.
- Invest in new attractions, and improve existing ones
For Kit-Kat;
- Aim towards getting a share in the "on-the- go" market.
- Promote anti-obesity.
- Link promotions to mobile phones
2.0 - INTRODUCTION
2.1- Company Background
Sales of chocolate confectionery are primarily driven by impulse purchases and the market is therefore highly dependant on branding. Consequently, this report focuses on two brands; Kit-Kat and Dairy Milk of the two manufacturers; Nestle and Cadburys.
Nearly a third of all the chocolates the British consumers eat are made by Cadbury, their main brand being Dairy Milk, which is worth about £250m every year. With their rival, Nestlé's Kit Kat achieving sales up to £260m. (Key Notes 2003)
> Nestle
Nestlé is the world's largest food and Beverage Company and employs over a quarter of a million workers. Nestle launched Kit-Kat in 1935. When first launched, it entered a market dominated by Cadbury's Dairy Milk. Kit-Kat is one of the largest operating brands serving over 120 countries, with its most important markets in Europe and the Middle East. The volume of sales for Kit-Kat was 67% for the UK, and over the last decade the overseas market has grown more than 50%. The net profits, ROCE2 and market shares drive the company. The annual sales for Kit-Kat are £535m P/A. (Kotler, 2002)
> Cadbury's
Cadburys' Dairy Milk was first introduced in the early 1900's. In the introduction stage the product became an instant success, becoming the market leader. It's still the top selling chocolate brand in the country. Today the brand has become global and the family of products has an international retail value of £1bn. The chocolate is known in over more than 30 countries around the world. In the year ending 29 December 2002, Cadburys PLC reported a massive turnover of £5.3bn with a following 6.8% increase from 2001. The company's tax profits have increased by 2.1% from £813m in 2001 to £830m in 2002. (Cadbury Annual Report 2003)
2.3 Product Specification
Cadbury's Dairy Milk and Nestlé's Kit-Kat are the biggest confectionery brands produced by their respective Manufacturers. Dairy Milk is made of whole chocolate whereas Kit-Kat has a wafer toped with chocolate. (www.businessreview.com)
3.0 MARKET ANALYSIS
3.1 Market Characteristics
Nestle and Cadburys are constantly processing new products whilst many novel ideas stem from this sector. The type of market that both companies compete in can be classified as continuously growing.
Busy consumer lifestyles and increasing demand for on-the-go eating have been beneficial to leaders of the market. As evidence suggests that Kit-Kat themselves have labelled their chocolate with a slogan 'have a break, have a Kit-Kat'. Recently, the Nestlé's has produced innovative snack packs in order to advance their end of the competition, allowing consumers to save remaining pieces of chocolate for when the need arises to eat them.
3.1.1 Seasonal promotions
The overall market for the chocolate confectionery can be termed as seasonal. This is due to the fact that all other companies in the same market as well as Nestle and Cadburys produce innovative lines around seasonal terms.
Continued interest in the celebration of festivals is essential for the existence of the seasonal market, which encourages manufacturers to develop a broad range of products to appeal to a wide target market. Innovation is critical, as manufacturers continue to devote themselves to satisfying seasonal demands.(Mintel 2002)
3.2 Market Potential
The chocolate confectionery industry accounts for the majority of the market, being worth an estimated £3.49 billion, representing the total confectionary market worth £5.18 billion, equivalent to some 554,000 tonnes in volume terms in 2004. Although chocolate volume has grown slightly since 1997, this represents a decline from a peak in 2000. In value terms, there has been a decline since 1997. (Mintel 2002)
TABLE 1: -Sales of chocolate confectionery, by product type, 1997-2002
997
999
2002 (est)
% change
£m
%
£m
%
£m
%
997-2002
Countlines, of which
,503
43
,680
45
,498
43
-0.3
- traditional
,017
29
,140
30
,033
30
+1.6
- CBCL3
486
4
540
4
465
3
-4.3
Boxed chocolates/ assortments
647
9
713
9
699
20
+8.0
Blocks
563
6
566
5
531
5
-5.7
Selflines
374
1
383
0
402
2
+7.5
Seasonal
409
2
409
1
363
0
-11.2
Total
3,496
00
3,750
00
3,494
00
-0.1
Source: Mintel 2003- Chocolate Confectionery
Table 1 shows that countlines comprise the most important segment of the chocolate confectionery market, with a value share of 43% of the market in 2002. This segment has declined slightly faster than the market over the period 1997-2002.
However, it's the smaller Chocolate biscuit count line segment that's been responsible for the decline, with the traditional segment showing some growth over the period. Boxed chocolates have shown relatively healthy growth over the period, fuelled by the activity in the twist-wrapped segment, while blocks have shown a slight decline. (Mintel 2002)
Self-lines have grown well also as this segment has captured the interest of the consumer with considerable new product development and promotional activity. (Mintel 2002)
3.3 Customer Analysis
3.3.1- Purchase Of Confectionery By Household With Children
The purchase of confectionery by household is largely influenced by the presence of children. This is due to the direct effect of advertisements and promotional activities targeted at children putting a strong influence of their 'Pester Power.' (Keynotes 2003)
3.3.2- Purchase Of Confectionery By Sex
Women purchase more chocolates than men. However, consumption patterns of individual chocolate-coated bars and individual bars of solid chocolate has greater levels of purchase by men than women. (Keynotes 2003)
3.3.3- Purchase Of Confectionery By Age
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3.3 Customer Analysis
3.3.1- Purchase Of Confectionery By Household With Children
The purchase of confectionery by household is largely influenced by the presence of children. This is due to the direct effect of advertisements and promotional activities targeted at children putting a strong influence of their 'Pester Power.' (Keynotes 2003)
3.3.2- Purchase Of Confectionery By Sex
Women purchase more chocolates than men. However, consumption patterns of individual chocolate-coated bars and individual bars of solid chocolate has greater levels of purchase by men than women. (Keynotes 2003)
3.3.3- Purchase Of Confectionery By Age
The age group with the largest overall confectionary purchase level is the 25-34 year olds. The combined age group of 16-44 year old have a higher percentage of confectionary purchases, compared to 45 + age group. Youngsters4 show a high level of purchases in sectors for individual bars and single packets. (Keynotes 2003)
3.3.4- Purchase Of Confectionery By Social Grade
Purchases of chocolate confectionary are stable across income levels, with exception of the E category who purchase the least. Individual chocolate bars have a high level of purchase by all groups, whilst compared to box chocolates with the lowest levels of purchases. (Keynotes 2003)
3.4- Competitor Analysis
The confectionery industries are highly competitive and the Companies compete with many other Global, national and regional companies and private label.
They compete actively in terms of quality, taste and price of the brands. They seek to develop and enhance brand recognition through the introduction of new products, new packaging, extensive advertising and promotional programs.
Cadbury is among the top two confectionery companies in the world by sales
Value (Euro monitor 2002). The chocolate confectionery market is primarily a branded market.
Cadburys, Mars and Nestle dominate the UK market as major players; these are multinational companies trade globally, with strong brand names. They are internationally trading companies with a large portfolio of strong brands, supported heavily by advertising and promotion. Medium-sized companies in the sector tend to have a more limited brand offer, but they also trade on at least a national level, in order to maximize the returns on brand investment. (www.researchandmarkets.com)
Chart 1: Market share of the chocolate industry in 2002
3.5- Distribution Analysis
Chart 2: Retail sales of chocolate confectionery, by type of outlet, 2002 (Mintel 2003)
Chart 2 shows the various outlets the confectioneries are sold. It can be seen that multiple grocers hold most of the Market share (43%). This could be because they have longer opening hours and can hold more stock at any time. Co-Ops hold the least (5%) (Mintel 2002)
4.0 PEST ANALYSIS
The PEST analysis will examine the macro environment and the impact of these factors.
4.1 Political Factors
LEGISLATIONS
The chocolate confectionery market is administered by the regulations related to the overall food industry. Therefore the industry is subject to accurate examination with respect to food legislation5.
4.1.1 The Chocolate Directive 1973
The Chocolate Directives as a part of the EEC formed existence in response to a need for common product standards and to delineate the key elements along with the proportions that was to be used to make chocolate. According to the directive UK and the member countries were allowed to add up to 5% of vegetable fat other than cocoa butter, to chocolate. (Keynotes 2003)
The Directive permits the UK to use a different recipe to produce chocolate and label it 'Milk chocolate', however if exported, was to be labelled 'family milk chocolate'.
4.1.2 The Association of the Chocolate, Biscuit and Confectionery Industries of the EU (CAOBISCO)
The CAOBISCO is a large body representing around 1800 companies involved in the manufacture of chocolates. The body was to speak on behalf of the confectionery sector, to advice and inspire policy makers that were responsible for community/international legislation, with an impact on the economic environment drawn up by experts on its various committees.
4.1.3 Biscuit, Cake, Chocolate and Confectionery Alliance (BCCCA)
BCCCA is a trade association for manufacturers in this sector of the UK food industry. It exists to facilitate communication between manufacturers of "Alliance products", and to represent their interests to government and media
4.2 Economical Factors
4.3 Population
Demand for confectionery has a major influence by the growth of the population and by the age profile of the population.
TABLE 3: - UK Resident Population Estimates by Gender (000 and %), Mid-Years 1998-2002
998
999
2000
2001
2002
Female
30,002
30,081
30,162
30225
30,294
Male
28,347
28,453
28,492
28611
28,713
Total
58,349
58,534
58,654
58836
59,007
% Change year on year
0.3
0.2
0.3
0.3
Source: Data adapted by Keynotes 2003 (Confectionery) from National Statistics website.
Chart 3 shows a steadily rising population in the UK.
Overall, the population is growing between 0.2% and 0.3% per annum, which should be reflected broadly in the growth in the demand for chocolate by volume, but the population is ageing and there other trends in food consumption. (Keynotes 2003)
TABLE 4: - The UK population by Age Group (000 and %), 2000, 2001 and 2006
Age Group
2000
2001
2006
% Change 2000-2006
0-14
1,322
1,240
0,707
-5.4
5-29
1,400
1,341
1,696
2.6
30-44
3,751
3,912
3,701
-0.4
45-59
1,083
1,262
2,009
8.4
60-74
7,801
7,780
8,243
5.7
75+
4,399
4,452
4,590
4.3
Total
59,756
59,987
60,946
2.0
Source: 2000- Based National Population Projections, National Statistics website reproduced by Keynotes 2003 (Confectionery)
Table 4 indicates that the child population is declining; this is expected to have a significant impact on the confectionery market. (www.nationalstatistics.com)
4.4 Gross Domestic Product
As shown by table 5, UK has sustained strong economic growth for a decade, despite recessions in other parts of the world and in some sectors of its domestic economy.
TABLE 5: - Gross Domestic Product at current and constant 1995
Prices (£m and %), 1998-2002
998
999
2000
2001
2002
Current Prices
859,384
902,459
950,415
993,124
,043,301
% change year-on-year
5.0
5.3
4.5
5.1
Constant 1995 prices
785,777
804,713
829,517
847,022
862,267
% Change year-on-year
2.4
3.1
2.1
.8
Source: National Statistics Website & Keynotes 2003 (Confectionery)
Despite the slowdown of the world economy, UK GDP continued to grow in 2002, with an increase of 1.8% at constant 1995 prices. Despite economic growth slowing in the final quarter of 2002 to 0.4%, compared with 0.9% in the previous quarter. The slowdown in economic activity in 2002 had an effect on most markets, and had an impact on household disposable income. (Keynotes 2003)
4.5 Household Disposable Income
A strong growth in household disposable income is shown in table 6.
TABLE 6: - Household Disposable Income (£ and %), 1998-2002
998
999
2000
2001
2002
Household Disposable Income (£)
9,554
0,230
0,724
1,560
1,928
% Change year-on-year
7.1
4.8
7.8
3.2
Source: STATBASE, National Statistics website reproduced by Keynotes
The growth in household disposable income provides a momentum for growth in spending on food and drink, which in turn leads to a demand for chocolate confectionary.
However, the overall demand for chocolate confectionery doesn't pose a great influence from changes in disposable income, although changes do affect the balance between luxury and commodity chocolate confectionery. (Keynotes 2003)
4.6 Inflation
The current inflation rate in the UK is at 1.2%. This means that prices are increasing at a rate of 1.2%. This impacts on the chocolate confectionery industry, as the retail units providing chocolates tend to be under pressure from their competitors to reduce their prices. (www.ft.com)
The inflation rate will have a direct impact on the chocolate confectionery industry, as the products provided are seen only as luxury goods and not necessities. Therefore as inflation rate goes up, consumers may cut back on chocolates consumptions.
4.7 Pricing
Due to bad harvests, there's been an increase in cocoa prices. This has resulted in an increase in raised prices of chocolate bars throughout the world by as much as 40%. In previous years, the weakening of the US dollar and the introduction of the euro are responsible for speculation about price rises. Major market leaders6 are unable to avoid this situation and are forced to raise prices. (Keynotes 2003)
5.0 Social Factors
5.1 Health and Diet
The diabetic population has shown a major increase, which has resulted in increased marketing of sugar free chocolate products, as well as alternatives to the key-sweetening ingredient, Malitol. (Keynotes 2003)
A major concern is that the chocolate confectioneries contain a high level of fat and sugar, and over-consumption could lead to tooth decay, obesity and various other health problems. Manufacturers have responded to this by making claims that as part of a balanced diet, chocolate can be beneficial in providing energy and nutrients apart from the pleasure they offer to eaters. For example, Nestle have introduced a new Kit-Kat carbo-lite to respond to these new trends. (Marketing Week 2003)
The danger of chocolate confectionery to people's health can cause government intervention, which in turn may lead to related opposing campaigns and protests.
5.2 Family Sizes
Recent surveys show that family sizes in the UK are decreasing. The rise in smaller households indicates a positive impact towards the confectionery industry/market, as households could contribute to sales by making more frequent purchases during smaller shopping trips. (Keynotes 2003)
5.3 Change in lifestyles
Consumers' lifestyles are changing with a current trend towards much busier and pressured lifestyles. Consumers are in search of on-the-go refuelling without the need to spend time on preparing food or visiting restaurants. The chocolate confectionery industry is meeting this need since it's a readily available, easy to eat and inexpensive product. Consequently, consumption of chocolate confectionery allows multitasking. Examples of these are eating while working, socializing or driving. In addition, chocolate is an ideal small indulgence. (Mintel 2003)
6.0 Technological
6.1 Mobile phones
Industry consensus shows that the rise in popularity of mobile phones is a major factor in holding back growth of confectionery. According to Oftel7, 88% of young people aged 15-24 8spends more on mobile phones than any other. Some manufacturers such as Cadburys have taken a pragmatic approach to the problem through launching a promotional campaign whereby 65 million bars contained a message on the wrappers with a code. The consumer sends a text message from their mobile phone to a telephone number and receives an instant win or lose message. (Market Research GB pg 1-22)
6.2 Internet
Internet has become an essential advertising tool. Kit-Kat has illustrated this through their highly innovative, and very successful, partnership with MSN.co.uk, which demonstrates evidence of how the Internet can be a vast new marketing opportunity. (www.business2000.com)
However, Internet shopping for chocolate confectionery is not believed to be a source of revenue, since the majority of purchases of such products are made on impulse.
6.3 Vending Machines
Vending machines started of as a small technological move, and have now become one of the largest growth areas for chocolate industries. There has been multiple growth and acceptance by the consumers for vending machines. They are found in nearly all-underground stations and other public areas such as colleges and hospitals. (www.ukvending.com)
7.0 SWOT ANALYSIS
7.1 Cadbury
Strengths
. Long history up to 200 years.
2. Cadbury and Schweppes have been awarded Royalty.
3. The third largest beverage company in the world.
4. The fourth largest confectionary companies in the world.
5. Products are sold over 200 countries.
6. Profits are increasing year by year.
Weaknesses
. Very few new products are created by own group.
2. Small range of products.
3. Highly weather dependant
4. Single asset company
5. Ongoing investment in new attractions required
Opportunities
. Expand into new markets of non core activity such as food or retail
2. Produce new products
3. Try different types of businesses such as tourism/ leisure activities
4. 18 % of young adults leave home without eating breakfast (www.runnersworld.co.uk)
Threats
. Nestle.
2. Supermarket own brands
3. Rationale for being listed questionable (small market cap and one major shareholder).
4. Exposed to tight labour market and wage inflation.
7.2 Nestle
Strengths
. Nestlé does not favour short-term profit at the expense of successful long-term business development.
2. Nestlé is a consumer-driven company, and we tailor our products to suit local tastes and desires.
3. Nestlé sets its commercial policy independently and does not fix prices in agreement or collusion with competitors.
Weaknesses
. Strong seasonal sales trends, which result in inconsistent sales patterns throughout the year.
2. Nestle have elative weakness in the US market. (www.foodnavigator.com)
Opportunities
. Expand into new markets of non-core activity such as food or retail
2. Produce new products
3. Limited edition extensions to their products during the holiday season.
4. The chocolate sector is likely to benefit from the trend towards gift giving and sharing among others, which will increase sales of items such as chocolate assortments
5. 18 % of young adults leave home without eating breakfast( www.runnersworld.co.uk)
Threats
. Supermarkets creating their own brand confectionery
2. Food legislation
3. Other growing food sectors, such as snacks and savouries, threaten the confectionery's market share
8.0 MARKETING STRATEGY
8.1- Marketing Objectives
8.1.1- Cadburys Dairy Milk
Cadburys strategy is to create robust and sustainable regional positions in its two core markets, confectionery and beverages, through organic growth, acquisitions and disposals. (www.cadburys.com)
The Group's five goals for the 2004-2007 periods are to:
> Deliver superior shareowner returns on the back of superior business performance
> increase profitability and share of the global confectionery market
> secure and then grow its share of the regional beverages markets in which the group has chosen to participate
> ensure that the Group's growth capabilities are best in class
> reinforce its reputation as a company which motivates, develops and rewards employees for superior performance and make a difference in the communities in which it does business.
In pursuit of the Group's goal of superior shareowner returns, three external financial performance goals have been set for 2004-2007 period. These are:
> turnover growth of between 3% and 5% per annum at constant currency
> underlying operating margin growth (before goodwill/intangibles amortisation and exceptional items) of between 50 and 75 basis points per annum at constant currency
> Free cash flow totalling £5 billion over the four-year period. (Financial Report 2004)
8.1.2 Nestlé's Kit-Kat
The aims for Kit-Kat:
* Develop brand to maintain and improve position in market
* Offer consumer value for money
* Focus on advertising and promotions (Kotler 2002)
8.2 Marketing Tactics
8.2.1Cadbury Dairy Milk
To achieve its performance goals, the Group has put in place major cost and growth initiatives, such as Poster campaigns, TV Adverts, and Sponsorship to famous programs such as Coronation Street.
8.2.2 Nestlé's Kit-Kat
> Kit-Kat created two formats - Eight packs of two finger Kit-Kats, and individual packs of four fingers Kit-Kat.
> The product was aimed towards two markets - confectionery, and biscuits.
> Produced different packs for multiple grocers and independent sector to avoid direct price and value comparison by consumers (Kotler 2002)
8.3 Market Segmentation and Targeting
The brands of Kit-Kat and Dairy Milk are targeted more towards the youth market. This is because this segment contains consumers who are more susceptible to purchasing chocolate bars and products. (Mintel 2002)
Market Segmentation is often divided up into four primary bases, with each one being designed to analyse its segmented market. These four types of segmentation are:
> Geographic - focuses on variables such as regions, population densities and population growth rates. As a consequence the Kit-Kat and Dairy Milk brands are mass marketed to a greater extent in cities and large towns
> Demographic- focuses on targeting markets based on variables such as age, gender, occupation and income. In terms of demographics, the youth market includes teenagers and people in their early to mid twenties.
> Psycho-graphic & Behavioural- Psycho-graphic and Behavioural Segmentation are both very similar types of segmentation in the fact that they are connected to factors such as values, attitudes, usage rates and lifestyle patterns. The Kit-Kat and Dairy Milk chocolate brands are small and compact. This in turn makes it very easy to eat and simple to carry on-the-go, therefore making it appealing to the lifestyle requirements of consumers on the youth market who are constantly on-the-go.
8.4 Market Positioning
The Confectionery market is huge. The market positioning shows some of the major players in the confectionery market and where they're positioned in the market in terms of range of products and type of product. Dairy Milk is seen as an Indulgence product with a wide variety, whereas Kit-Kat is seen as a snack with a wide variety available.
9.0 MARKET ACTION PLAN
9.1 Product
9.1.1- Kit-Kat
> Variety of different types and flavours such as the trademark four stick pieces of chocolate, Kit-Kat Chunky, Kit-Kat Cubes and Milk Chocolate Kit-Kat.
> The option of choice in the Kit-Kat brands is very appealing to consumers because they can choose which type of chocolate to suit their mood. (www.nestle.com)
9.1.2- Dairy Milk
> Dairy Milk product is essentially just a milk chocolate bar with extra ingredients such as nuts or caramel. However they are in the process of introducing new varieties. (www.cadburys.com)
9.1.3- Comparisons
The Kit-Kat brand has a wider variety of choice in its products compared to the Dairy Milk brand.
Both the Kit-Kat and Dairy Milk products are packaged in a variety of wrappers, which are bright and colourful, which appeal more to the targeted youth market who are influenced more by the aesthetic appeal of a product.
The Kit-Kat and dairy Milk products are very recognisable and well known. However, Cadbury's Dairy Milk brand is more recognisable in the British market, whereas Nestle Kit-Kat is more known and recognised worldwide.
9.2- Pricing
Pricing is vital to the success of a product. It must be competitive, cover costs and offer consumers value for money. Research indicated a standard bar of Dairy milk is priced at the 45p mark, whilst Kit-Kat is about 40p. (Kotler,2002)
9.2.1 Factors determining the prices
The pricing decision is very critical. The primary factor involved with pricing decision lies with the volatility of raw materials for which the chocolate manufacturers use to manufacture goods and confections. Milk, sugar, almonds, and cocoa are all raw commodities, which fluctuate with differing conditions. (Kotler,2002)
9.2.2 Psychological Pricing
An average price is usually set to sell the two brands, however according to different localities, prices may be differed. Psychological pricing is used in order to make consumers believe that they are paying less for the chocolates. Research has indicated that this form will affect young teenagers rather than mature adults. For example, £1.99 instead of £2.00 for multi packs.
9.3- Promotion
The sales of chocolate confectionary such the Kit-Kat and Dairy Milk brands are highly dependent upon consumers being aware of the brand.
Kit-Kat and Dairy Milk brands are promoted aggressively with the sole objective of selling as much of the product as possible in order to generate as much profit as possible.
9.3.1- Advertising
For Nestle and Cadbury advertising is the main promotional tool. The use of advertising, especially TV advertising, is powerful in creating brand imagery for chocolate brands such as Kit-Kat and Dairy Milk, and this is why large amounts are spent on promotion.
According to Nielsen Media Research, Nestle spent £6.397 million promoting the Kit-Kat brand. However in the same year, Cadbury spent £3.178 million promoting its Dairy Milk brand. (Keynotes 2003)
9.3.2- TV advertising
TV advertising is an effective method to raise and maintain awareness and communicate brand messages to a mass market.
A key reason in the promotional success of the Kit-Kat brand compared to the Dairy Milk brand is that it is better marketed through television. The Kit-Kat adverts in particular have the memorable slogan "have a break, have a Kit-Kat." These commercials from Nestle, with its humour, correlate with the youth market by keeping the brand fresh and appealing.
Cadbury promotes its Dairy Milk brand during prime-time slots; they use products such as Dairy Milk in sponsoring Coronation Street9. On average 11 million viewers watch the programme, with a large proportion of viewers coming from the youth market.
9.4 Place
The consumers buy products from various retailers such as supermarkets, petrol stations, small newsagent, and grocery shops. Basically, any shop that sells any food or beverages store Dairy Milk and Kit-Kat in their confectionery section. For the small outlets they usually purchase items from wholesalers, as they cannot afford to buy in bulk.(Mintel 2002)
As chocolates have long shelf-life, they are not delivered frequently. However, during seasonal times demand rises therefore the delivery may be more frequent. The means of distribution used are intensive, as most chocolates are sold to wholesalers in large quantities using large vehicles.
0.0 Recommendations/Conclusion
0.1- Cadbury
* Focusing on the strategies, it can be gathered that in the industry's requirements are to increase the volume of sales and market share, consequently a proposal of the recommendation would be to invest in market shares within areas around the globe, where they have not yet ventured into.
* Cadbury has identified brand values and adjusts its advertising strategies to reflect these values in different markets. Another strategy identified was to increase brand awareness; as a result they must constantly promote their well-recognised logo, which is a glass of milk pouring down. However, research has indicated that consumers, especially the elderly group are now getting bored of it and therefore, the company must invest money to enhance the logo.
* Introduce products aimed towards people who eat "on-the-go," as research revealed that 18 per cent of young adults leave home without eating breakfast
* Buy large amounts of stock to compensate for low stock supply therefore, not having to be weather dependant.
* Invest in new attractions, and improve existing ones - Cadburys world is found on the net where people can go to visit. This could be a chance to promote products.
* Invest more money around different sectors of the globe in order to make the company recognised all around the world.
0.2- Nestle
* Aim towards getting a share in the "on-the- go" market.
* Promote anti-obesity.
* Use Internet to promote products: Sending e-mails to potential consumers, conduct online surveys, offer special discounts/incentives.
* Concentrate on improving year round sales rather than relying on seasonal sales - concentrate on advertising more on products which are to be consumed throughout the year, rather than during special seasons.
* Sponsorship of football teams and popular television programmes. This would create awareness of a brand while at the same time generating more revenue from sponsorship
* Improve standing in the US market - Market research, what do consumers want?
* Invest in poster ads/campaigning. This is because Cadbury has been very successful in this field of promotion.
* Invest in key organic ingredients as substantial research has indicated that the target markets are now becoming more aware of natural products, consequently are willing to pay more.
Through completing the report, it can be suggested that both the brands 'Dairy milk' and 'Kit-Kat' are favourable and can be identified at a growth stage in the product life cycle. Previously, Kit-Kat were losing sales and became inclined at a decline stage. Consequently they decided to introduce various varieties of products, which have led to their current success. Dairy milk although have been well known throughout generations; have also followed Kit-Kats footsteps. Recently Dairy milk have launched a family of products and a vast amount of flavours such as Dairy milk shortcake, mint chips in order to keep ahead of the game.
Refer to appendix 1 for a table of summary
2 Return On Capital Employed
3 Chocolate biscuit count line
4 16-24 year olds
5 A list of food law publication can be found in the Appendix.
6 Nestle and Cadbury
7 The UK regulator for telecommunications
8 The valuable age group in confectionery
9 soap drama on ITV 1
Kit -Kat & Dairy Milk
PRINCIPLES OF MARKETING
4MBS501
