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PEST and competitive analysis facing by confectionery organisations

Extracts from this essay...

Introduction

Summary This report defines the PEST and competitive analysis facing by confectionery organisations. The international organisation's Cadbury and Nestle are the organisations where the leaders of confectionery food. This report will discuss the strategy using by these two companies and their mission, what are their objectives and how can they achieve their goal? Introduction The UK confectionery market forms part of the food industry and was valued at £5.54bn 2001. Sales have increased over a number of years. Although not an essential purchase, confectionery is bought by the majority of the population. Changing eating habits have led to increased levels of snacking and grazing and, as a highly accessible and desirable food, confectionery has been able to capitalise on this trend. There are two main sectors in the market - chocolate confectionery and sugar confectionery. The UK market is relatively mature. As a consequence, there is little scope for market growth. The predominant trend among the leading companies is to expand through brand extensions rather than new product offers. Confectionery is an impulse market, which means that strong brand identities are of key importance. Creating new products by extending established brands carries lower risks than launching new ones, because the products have a head start in the market. Limited editions, where items are offered in new variants for short periods of time, are also favoured. Although this type of activity can maintain interest in the market, the actual growth potential is limited. Sectors that have expanded since the late 1990s include boxed chocolate. The market has grown since the introduction of the new twist-wrap selections, including Celebrations (Mars UK Ltd), Miniature Heroes (Cadbury Schweppes PLC) and All Stars (Nestle holdings UK PLC). Other new and growing sectors include organic chocolate and sugar-free confectionery. Dental gums have built on the success of sugar-free chewing gums. The UK confectionery market is dominated by three groups - Cadbury, Mars and Nestle All are internationally-trading companies with a large portfolio of strong brands, supported heavily by advertising and promotion.

Middle

So the companies should make sure the price of the chocolates is acceptable and enough stock in their branches and stores. Apathetic or satisfied buyers are not likely to change, it Cadbury and Nestle satisfied the customers needs and wants like enough stocks, more choices, and price the customers are not going to change their favourite. The Bargaining Power of Buyers The extent to which the buyers of a product exert power over a supplying organisation depends upon a number of factors. Broadly speaking, the more power that buyers exert, the lower will be the transaction price. This has obvious implications for the profitability of the supplier. The fewer the buyers and the greater the volume of their purchases the greater will be their bargaining power. A large number of buyers each acting largely independently of each other and buying only small quantities of a product will be comparatively weak. For the confectionery products the purchasing powers for the consumers are very high, buyers can get the products everywhere like supermarkets, schools, petrol stations, grocery shops, cinemas others. The consumers are not really care about the price of confectionery products at different places because it not expensive things. For example, the Cadbury Egg costs 50pence at supermarkets but it sell 60 pence at cinemas. The buyers are not going to calculate the 10 pence differentiation. In the other hand, the buyers will choose other substitute goods like they will buy KitKat costs 40pence. The Bargaining Power of Suppliers Businesses must obtain the resources that they need to carry out their activities from resources suppliers. These resources fall into the four categories we have previously encountered: human, financial, physical and intellectual. Resources are obtained in resource markets where prices are determined by the interaction between the businesses supplying a resource and the organisation from each of the industries using the particular resource in question. It is important to note that many resources are used by more than one industry.

Conclusion

* Products can often be 'brought back to life' with new advertising campaigns and packaging. An example of this may be The Triple biscuit made by Fox's Biscuits, as it has recently undergone a new packaging campaign. Threats * Massive amounts of money are needed to launch a new product, and this often puts companies off from bringing new products out in case it fails and loses them a lot of money. * There is now a big campaign about health. This is not likely to decrease and so people will be encouraged even more to stay away from things such as confectionary. * Many retailers (especially supermarkets) are now doing there own brands. This affects other brands because the retailers may choose to place their own brands in better places on the shelves. They are also often cheaper, and so this will attract a lot of people. * The demographic pattern of Britain at the moment is that it is ageing. There is a bigger ratio now of old to young then there has been for a long time. Older people generally eat fewer things than young people, and so this could have an impact on the business, as sales may fall. Conclusion In conclusion, the UK confectionery market forms parts of the food industry are increasing year to year. The two confectionery leaders on the world are Cadbury and Nestle. Cadbury are provides a mass market product, they produce more than hundred various confectionery. The two companies have their different business strategy, structure, policy, culture, mission, objectives and other but the one thing will be the same is the Company's strategy will continue to be guided by several fundamental principles. Nestlé's and Cadbury's existing products will grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential will never be sacrificed for short-term performance. The Company's priority will be to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.

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