Cost plus pricing is appropriate because the information is more accurate and reliable which is good because Cadbury won’t waste time this way. If for example information is not accurate then Cadbury will have a problem. This will reflect the attitudes of all their customers because wrong information is being given. Customers will feel that Cadburys can’t be trusted.
In this case Cadbury always try to give their customers the right description. If they don’t then they will have to suffer the consequences. It could be that an image of a bad reputation is portrayed and prices and demand would decrease.
Demand based pricing is also appropriate because Cadbury is prepared to sell their chocolate bean at the price customers are willing to pay otherwise they will have no demand on the chocolate bean. This is also bad because competitors such as Nestle and Mars can steal customers by lowering their prices. The advantages would be that Cadbury has a high demand for their product and a good reputation. They will also be making a profit.
In this case Cadburys would have to keep low prices and they have done in the past compared to some of their competitors. This is because their customers are satisfied with the product.
What is the most appropriate method of communication through promotion of the product?
The most appropriate method of communication is through promotion of the chocolate bean for Cadburys could be branding.
Branding is essential because Cadburys is a brand name that customers recognise. This is an advantage because most consumers think that brand named products is good quality. Consumers also recognise the logo of the milk in the glass being poured so it is important that Cadburys keep their logo simple.
Cadburys give their packaging a more modern feel, while still retaining the essential elements that have come to be identified with the product.
Advertising is another method of communication. Cadbury advertises so that the buyer receives information on chocolate beans and it persuades them to go and buy chocolate. It is informative. The main purpose of advertising is
- To increase demand for e.g. if the demand curve shifts to the right Cadburys can sell more at a particular price.
- Cadburys brand name will still be loyal and customers will continue to buy the its products including both its chocolate beans and bars.
Advertising media is good because the mass media are the means of communications, which reach a large sum of people by T.V- newspapers, radio and magazines are the primary mass media.
Cadbury communicates with its public by advertising their products on T.V, newspapers, radio and magazines. Cadbury also advertises by billboards and Internet.
Television advertising is expensive but Cadbury can afford it because it has a high market position. It uses T.V advertising to advertise many of their products. The company also advertises on buses because a whole range of people get to see what it offers and it keeps them in suspense. This make the people want to buy the product.
Public Relations is another method of communicating. It is a process of a specific message to it’s stakeholders so as to achieve favourable publicity.
For Cadbury, Public Relation involves:
- Keeping the media informed of new products or changes to existing products
- Organising a product launch
For Public Relations to be effective they have to:
- Be planned and controlled so that the right message gets across to the right people
- To be ready if any problem accurse.
Sales Promotion refers to the techniques and the methods used by Cadbury to sell their products to customers. A primary purpose is to get the customers to take action and purchase a product.
Discounts such as ‘buy one get one free’ is a good way of selling and is popular with supermarkets.
Cadbury use different techniques if they are not selling something as good as usual. They reduce the price and put offers on such as increasing the weight, the size or even the quantity of the chocolate.
The overall objectives of sale promotions are;
- To encourage potential customers to buy Cadburys products.
- To promote and to maintain customers loyalty.
- To persuade business to stock and sell the products.
Distribution
Distribution is a way in which the seller gets the right goods and services to the customer. It could either be consumers or other businesses. Distribution has to be on time, first time and every time. For Cadbury to do this job properly they need an effective logistics system to place the product at the point where it is required by the customer.
At Cadburys, distribution is a customer service that should satisfy the actual and perceived needs of the buyer. If it does not work this way then it will soon go out of business.
Cadburys have to have experience of:
- The goods ordered are not delivered on time.
- You’re local shop stops selling your favourite brand.
- You are over charged twice in the same shop
There is no effective demand if goods and services are not made available to locations where customers are able to buy them.
The chain of distribution has four main elements.
- Producer
- Wholesaler
- Retailer
- Consumer
DIRECT SALES, DIRECT SUPPLY OR SINGLE STAGE CHANNEL DISTRIBUTION
PRODUCER CONSUMER
Producers to consumers are called direct selling.
Internet is now firmly part of Place in marketing and selling goods and services in the UK.
SHORT CHANNELS OF DISTRIBUTION OR TWO STAGE SUPPLY CHAIN
PRODUCER INTERMEDIARY CONSUMER
The intermediary could be:
- Retailer – who deal with large retailers
- Dealer- deliver directly to dealers
- Wholesaler – buy in bulk direct from the manufacturer
- Franchise – this is a lenience given to a distributor or retailer
- Own shop – makes and sells through its own retail chain
LONG CHANNEL OF DISTRIBUTION
PRODUCER WHOLESALER RETAILER CONSUMER
This is when there are a large number of small retailers. The producer will usually deal with a wholesaler who buys in bulk, stores the product and sells them on to the retailer in smaller quantities.
Cadburys who are the manufacturers sell directly to large companies in large quantities. This is because the large companies sell them to customers directly.
The wholesalers buy in bulk directly from the manufacturer. They then sell directly too for e.g. this is because they are supplied with a smaller amount of products to retailers (corner shop) who in turn sell individual packs to consumers. Wholesalers provide retailers with goods where they are needed.
If the retailer is large then they also buy straight from the manufacturers. Customers buy from retailers because it is easier and they need the right amount.
For e.g. Morrissons sell Cadburys products both individually and in packs. This is because most consumers may prefer to buy more.
It is also effective because it makes people come across Cadburys products all the time.
Short channels of distribution or two-stage supply chain could be as follows
RETAILER DEALER AGENT FRANCHISE OWN SHOP
The advantages of short channels is
- Manufactures is able to control and monitor the supply of the product
- Dealers get financial help and support in return for an exclusive dealership, i.e. agreeing not to sell a competitive product.
- Manufacture is able to respond quickly to change in the conditions of demand.
Cadburys, the manufactures, control and monitor the supply because they know how much their customers want. They also don’t want to sell products their customers won’t buy so it is essential that they sell products their customers are prepared to buy. It is also essential that they try distributing their product in different ways to see which is more effective.
Disadvantages of short channels is
Retailers can become very powerful and are able to negotiate on very low prices. This has happened with many suppliers to UK retail chains. Low prices, however, have not been passed on to consumers.
The cost of distributing the product may rise.
Cadburys are a good company with a high market share so it may be slightly difficult but they have managed due to good marketing strategies. It has distributed its products in many ways even if they have failed in some but they always try to find the right way to distribute their product so their customers stay satisfied.
The long channel of distribution could be as follows
PRODUCER WHOLESALER RETAILER COMSUMER
When there are a large number of retailers, Cadbury (the manufactures) will usually deal with a wholesaler who buys in bulk, stores the products and sells them on to the retailer in smaller quantities. A small grocer will usually go to the wholesaler. This is mainly done regularly to avoid the small space.
Advantages of long channels
- Retailer gains convenience and minimises storage costs
- Consumers are able to buy in small quantities from retailers
- Goods are available close to where they are needed
- Wholesalers provide valuable retailer support services
- Transport costs are lower because the producer does not have to make as many deliveries.
Disadvantages of long channels
- Prices tend to be higher when goods change hands many times; compare prices in the corner shop with those in supermarkets
- Producers have less control over the way in which goods are stored and sold
