What aspects of Cadbury Schweppes marketing have ensured they retain their market leadership and how has ICT contributed to this success?
What aspects of Cadbury Schweppes marketing have ensured they retain their market leadership and how has ICT contributed to this success?
Introduction
The following report discusses how Cadbury Schweppes have used the Marketing Mix and ICT to retain their market leadership.
Methodology
The first thing I did was to design a questionnaire on Consumer habits. This is a form of primary research. In this questionnaire I included questions like "how often do you buy chocolate" and then gave a choice between so many different answers. With this questionnaire I have found out that most people are influenced by TV-adverts and most people respond to Special promotions?
Next we went on a visit to the Cadbury factory. The Cadbury factory is located in Bourneville, Birmingham. Cadbury Schweppes buys its high quality cocoa beans from a country in West
Africa called Ghana and Malaysia. Then they are processed at their highly technical cocoa factory, which can be found in Chirk North Wales.
We found out that Cadbury Schweppes chocolate production is a computer controlled process, with much of the new specialist machinery being produced to Cadbury's own design and specification. Cadbury Schweppes use Batch Production, which is when you make the product in small batches mainly because of the products shelf life, or in Cadburys case to be able to swap the moulds around quickly to make different bars of chocolate to satisfy customer demand for certain bars.
In the Cadbury Schweppes factory they use automated production to make their batches of chocolate.
Another way of doing research is looking on the Internet at the London stock exchange
To do this you go on http://uk.biz.yahoo.com/p/c/cbry.l.html
This chart compares how well Cadbury Schweppes is doing against the average of the top 100 companies in the last year on the Financial Times Stock Exchange (FTSE). The graph shows that Cadbury Schweppes was not doing so well before August but after that they have been doing very well. However despite their ups and downs Cadbury Schweppes did perform better than the top 100 companies on the FTSE. In December Cadbury Schweppes announced that they were going to shed 10% of their workforce. This may be because of the slight drop in sales.
This graph shows how well Cadbury Schweppes has been performing against the top 100 companies on average in the last 2 years. Cadburys has been performing well.
On our trip at Cadbury Schweppes we were showed how Market Research was used to get the customers attention. One example of this is the Coronation Street.
When they film the advert of the chocolate street they only get a couple seconds of footage each time.
At Cadbury Schweppes they use batch production to produce their chocolate. This is where they make a batch with about a few thousand bars at a time. They do this so they can change the type of chocolate bar that are going to make and also because of the products shelf life. At Cadbury Schweppes they use automatic machines to make the chocolate so this is done as fast as possible. They make there chocolate according to demand, ...
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When they film the advert of the chocolate street they only get a couple seconds of footage each time.
At Cadbury Schweppes they use batch production to produce their chocolate. This is where they make a batch with about a few thousand bars at a time. They do this so they can change the type of chocolate bar that are going to make and also because of the products shelf life. At Cadbury Schweppes they use automatic machines to make the chocolate so this is done as fast as possible. They make there chocolate according to demand, for example if people are buying lots of Cadburys Dairy Milk that's what they will be making more of.
Marketing Mix
I intend to look at the Marketing Mix. This includes Price, Place, Promotion, Product and Packaging. I will be looking at how the Marketing Mix and how the use of ICT has made Cadburys Schweppes so successful.
The History of Cadbury's
The inventor of chocolate is not known but in 1847, Fry & Sons of Bristol, which merged with Cadbury Limited in 1919, sold the first chocolate. John Cadbury made a similar product in 1849.
The van Houten cocoa press (which was made in Holland) to the Cadbury Brothers Bridge Street factory in 1866, was the real break through, not only for the Cadbury business, but for the development of the chocolate. Cocoa butter, which was extracted from the cocoa beans, is the essential ingredient for chocolate. The Cadbury Brothers made a new recipe for chocolate, which is quite similar to that which we still enjoy today.
At that time only plain dark chocolate could be made and this chocolate was used for moulding into bars and covering fruit-flavoured centres to make the first chocolate assortments.
In 1875, a Swiss manufacturer, Daniel Peters produced the first milk chocolate bar using powdered milk. The idea of combining chocolate and milk was not entirely new as the Cadbury Brothers had sold a milk chocolate drink between 1849 and 1875 from an original recipe by Sir Hans Sloane.
Cadbury's made their first milk chocolate in 1897. It was a very coarse, dry eating chocolate, made by blending milk powder with the basic chocolate ingredients of cocoa butter, cocoa mass and sugar.
By this time Daniel Peters had perfected his recipe and was now using condensed milk rather than powdered milk to produce a chocolate with a superior taste and texture. The Swiss milk chocolate dominated the British market, a situation the Cadbury family set out to challenge.
Production
At Cadbury Schweppes they use Batch Production. This is when you produce the product in large or medium quantities and they all have to be the same. This is needed by Cadbury Schweppes because of the products shelf life and if Cadbury's wanted to change the moulds to make other chocolate bars this would be made easy. They use ICT to control and perform some manufacturing processes.
They also use a Just-in-time system, which is controlled by computers. This is when the new materials are delivered just before they are needed. This is good because they will not use much storage for long and it is more cost effective.
Cadbury Schweppes now use Computer-integrated manufacturing (CIM) which is where computers are used all the time, from the design of the product and the components, through all the different stages of production, including quality control, to delivery of the finished goods.
They also use computers to control the temperature of the chocolate and to pour the chocolate into the moulds. Computers are also used to make the wrappers and to pack them. They use spreadsheets for the company accounts. They advertise on websites where millions of people can see and they also use computers for the movement of the characters on the Coronation Street advert.
Questionnaire
I designed 20 questionnaires and handed them out to different people. I wrote my questionnaire about Cadburys chocolate. I asked questions like:
What is your favourite brand of chocolate?
And
Are you influenced by TV adverts for chocolate?
And I put in some answer boxes there to help answer the questions.
(Questionnaire attached).
With the results I found that most people are influenced by adverts on the TV. This shows that Cadbury Schweppes are doing well with their promotion.
I also found that more people respond to special promotions (for example buy one get one free) than don't.
Also I found that lots of people prefer Cadburys chocolate than the other brands of chocolate.
To improve my results I could do my research over a wider range of people and looking back I could have improved my questions and made them clearer.
Marketing
Price - Cadburys chocolate is sold at a reasonable price. Cadbury Schweppes look at the prices of their competitor's products to come up with a suitable price. This is for a good reason. The reason is that if Cadburys Schweppes had its price too low then people would think that the quality of the chocolate was not very good. Prices vary depending on the size of the bars, example some supermarket are selling Easter eggs, 5 small eggs for £5 or 5 large eggs for £5. They do this to boost their sales.
Packaging - Cadbury Schweppes use a technique called "MOTHERBRANDING", which is where they take their leading chocolate bar "Cadbury Dairy Milk" and add different fillings to it for example "Cadbury Dairy Milk with Caramel" and "Cadbury Dairy Milk with Turkish Delight". The wrappers are moved on a computerised conveyor belt to be packed by another computerised machine. The wrappers are used to promote the brand name and the slogan. They could change the slogan or the material they use to make the wrappers more attractive, the only problem is this could put off regular customers. People recognise and get used to certain wrappers, colours and logos. Motherbranding allows Cadbury Schweppes to advertise 2 or more products at once for example Cadbury Dairy Milk and Cadbury Dairy Milk with caramel. This way the advertising budget will be cheaper.
Product - Cadbury Schweppes use differentiation to make their chocolate differ from their competitors. Cadbury Schweppes have over 200 products on the market including Cadbury Dairy Milk, Twirl, Flake and Fuse. If a Cadbury Schweppes product were to start to decline in their product life cycle, then they could bring out a new chocolate bar or alter the one of the chocolate bars that is not doing so well. For example they could put different fillings in. When a product enters the product life cycle it enters the stage called introduction. Then it enters the growth period where people are more use to the chocolate. Then there is maturity where sales are still growing, but at a slower rate. The next stage is when the market becomes saturated with the product and then the product goes into decline. This is a standard Product Life Cycle.
Product Life Cycle
Extended Life Cycle
This life cycle shows what happens when a company puts extension strategies into place, such as giving offers on price, modifying the products or changing the wrappers. The sales will go up for a short time and then once again decline.
Promotion - Cadbury Schweppes spent £1081 million on Marketing Expenditure in 2001 to increase their turnover from £4575 million (2000) to £5519. Cadbury Schweppes advertise on Coronation Street, which is the seen by more people than any other programme. They also do special promotions like buy one get one free and 50% off a product. They could use this technique to help raise the sales of the chocolate bars that are not doing so well. They could also advertise on the Internet or on billboards. Cadbury Schweppes also lower prices on special occasions such as Valentines Day and Easter. They do this to boost their sales. They also sometimes change the wrappers for example on fathers day they designed a wrapper for super dad.
Place
The place deals with how a company distributes its products. There are three main channels of distribution, which are:
A B C
Producer Producer Producer
Wholesaler Retailer Customer
Retailer Customer
Customer
Cadbury Schweppes would most probably use channel A. They use Just-in-time deliveries where the raw materials are delivered just before they are needed to save storage space. Also if the goods are not needed then the delivery can be cancelled and the company want be stuck with the goods.
Conclusion and Recommendations for Future Growth
I think that the use of computers at Cadbury Schweppes is good because the chocolate is made fast and safely and the computers can control the texture of the chocolate better then any of the employers could do themselves. The computers are also good for keeping the accounts and things like that. Also Cadbury Schweppes wont need as many employers because the computers will do all the work, all they need workers for is to make sure that they are working ok and to fix them if they were to break down. We heard on the news that Cadbury Schweppes are facing some problems at the moment and will have to make 10% of their workers redundant over the next 12 months. This is because of the competition and the slight drop in sales.
The idea was that making some of the workers redundant they would have fewer overheads to pay, but the worker needs to work more efficiently.
Cadbury Schweppes could also use ICT in a niche market to make special bars for weight watchers or diabetics.
And they use ICT for advertising like the animation on the Coronation Street advert or to advertise on the internet.
I think that the use of ICT at Cadbury Schweppes is good and should be further developed to help raise the profits and standards of the company.
Kris Anderson Business Studies Coursework
