Indian Marketing Case. The Managerial Decision Problem is to find out whether Cadbury should introduce a new product in the dark chocolate category in Indian market. The Marketing Research Problem is to understand various consumer segments, their propensi

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2. Development of the Managerial Decision Problem & Marketing Research Problem

2.1 Managerial Decision Problem:

To find out whether Cadbury should introduce a new product in the dark chocolate category in Indian market.

2.2 Marketing Research Problem:

(I) to understand various consumer segments, their propensity to buy and thereby identify the target segments based on the same.

(II) To find the customers preferences and motivations for purchasing dark chocolates

3. Research Methodology

We first identified the Market decision problem and marketing research problems. Thereafter we did exploratory research through primary and secondary sources and descriptive research through focus group discussions and depth interviews. These helped us to form the Research Questions and the Hypotheses. Then we came up with the checklist consisting of the constructs we would like to measure in the survey. Based on the checklist we formed the questionnaire and floated to the identified sample. Based on the responses we performed factor analysis, multidimensional scaling analysis to form our recommendations.

4. Research Design

For answering the above defined decision and research problems, we conducted exploratory research to formulate the research questions and hypotheses.  With the analysis of primary and secondary data, and exploratory research through focus group discussions and depth-interviews, we have isolated key variables and relationships and gained insights for further research.

4.1 Exploratory Research

4.1.1 Secondary Data Analysis

Secondary data analysis was predominantly a study of Cadbury through industry reports and other research papers to understand the current market scenario and the situation that Cadbury and the dark chocolate category is facing now. Several components of secondary data analysis like Market Potential, Market Share, Market Characteristics and brand or company image have been covered below in Section 1.

Section 1: Problem identification research through secondary sources-brand or company image, market characteristics, market share, market potential,

Brand or company image:

It has been more than half a century that CADBURY has been the most loveable brands in India. The Cadbury brand has a profound impact on individual product brands. The brands derive benefit from the Cadbury parentage, including quality and taste credentials. However the strength of the umbrella brand supports the brand value of each chocolate bar. Consumers know they can trust a chocolate bar that carries Cadbury branding. The relationship between Cadbury and individual brands is symbiotic with some brands benefiting more from the Cadbury relationship, i.e. pure chocolate brands such as Dairy Milk. Other brands have a more distant relationship, as the consumer motivation to purchase is ingredients other than chocolate, e.g. Crunchie.

Market characteristics:

Sales of imported chocolate brands, such as Mars and Snickers, have outpaced those of Cadbury's locally made chocolate in modern retail outlets, according to top retailers. As a result, these companies will lose their pricing clout. Imported chocolates are not only in demand but also offer bigger margins as compared with the locally made brands to retailers. Cadbury is already at loggerheads with the Future Group, the country's largest retailer, on the deals and margins it offers. Seeing the increase in competition, Cadbury India is also looking at introducing more sophisticated forms of chocolates from its global portfolio to boost consumption and retain market share.

Anand Kripalu, managing director, Cadbury India, said, "The competition in the chocolate market has increased significantly. In spite of this, we have been able to hold on to our 70 plus per cent market share. We would look at introducing newer products to boost the consumption of chocolate in India. Chocolates are not consumed on daily basis, so we would look at positioning them for everyday consumption from being consumed only on select occasions.

Market share:

The size of the chocolate market in India was estimated at about 30,000 tonnes in 2008 and is valued at Rs.6,500 million (US $ 130 million). Cadbury India has the biggest market share at 65-70% while Nestle is the second largest at about 20-25%, whereas Amul has a share of about 5%. Cadbury reaches 0.6 million retail outlets.

The dark chocolate market in India is about 1.5% of the total chocolate market, with Bournville occupying over 1% out of the same. Made-in-India chocolate brands are growing at 25-30%.

Market potential:

Cadbury’s already existing dark chocolate product Bournville has a very specific target market. It target’s customers fulfilling criteria is-

• People with higher purchasing power
• Aimed at the 20-30 year old age segment
• Appeal to a select niche
• Chocolate lovers

Bournville targeted not all customers but the class of people who love dark chocolates. Currently it is the sole product in the Dark Chocolate category. But it has its share of weaknesses.

1. High Price- Bournville is priced higher than other chocolates limiting its target customer
2. It targets customers belonging to Sec-A category-High income group people->25 years of age
3. Classist perception- Bournville’s message of “you don’t buy it, you earn it” and “not-for-everyone” aura keeps a considerable section of people away from consuming the chocolate

Considering this, Cadbury has realized the market potential for dark chocolates in India. It has thus decided to launch a new product in this category at a lower price, in order to increase its customer base for dark chocolates in the Indian market

4.1.2 Primary Data Analysis

As a part of the exploratory research through primary sources, we conducted 1 focus group discussion (FGD) in the IIML campus itself and 2 direct and personal interviews. The details of the FGD and the interviews are given in Section 2 below.

Section 2: Problem identification research through primary sources- FGD and direct personal interviews

Focus Group Discussion:

We conducted a Focus Group Discussion amongst 5 participants from IIML campus itself who were in the age group of 21-25 years. The main purpose of this focus group discussion was to get a preliminary insight into consumer preferences and buying habits. The following learnings were obtained from the Focus Group Discussion:

1. First thoughts/perceptions about dark chocolates:

• Bitter in taste
• High cocoa content
• Good for health
• Costly
• Bournville and its Ad

2. Preference between dark and milk chocolates:

All the respondents had consumed dark chocolates before and only  1 out of the 5 respondents preferred dark chocolates while the rest preferred milk chocolates

3. Brand awareness with regards to dark chocolates:

All of the respondents mentioned Cadbury Bournville as a brand they knew while 3 of the respondents also included Hershey’s. One respondent also added frequent consumption of dark chocolates from the US but was unable to recall any name.

4. All the respondents said they would prefer more options to be available under dark chocolates. They were equivocal about trusting either Cadbury or Nestle to give them the best option(s) for the same.
5. The group also agreed that they would like dark chocolates to be priced at a premium. However, they also said that since the chocolate is a little bitter in taste, they would prefer if the chocolates are made available in smaller SKU’s, priced at around Rs.20-25.

Depth Interviews:

Unstructured, direct and personal interviews were taken to uncover underlying motivation, beliefs and attitude towards Dark chocolates. This led to a better understanding of the consumer behaviour, a better revelation of consumer perceptions and preferences. We interviewed 2 students of IIML in the age-group of 20-25 years. Consider A& B as the two interviewees.

In –Depth Interview:

1. 1st thing you look while buying a dark chocolate?

A: Chocolate should not have wafer in it.

     Should have strong taste

B: Slow melting in the mouth

    Good taste

    Good packaging

2. Brands of dark chocolates that come to your mind?

A: Cadbury Bournville

B: Cadbury Bournville

    Some imported chocolates (Don’t remember the name).

3. Does price play a role in buying a dark chocolate?

A: Yes, a little

B: Very much. 40 gm pack should be less than Rs 100

4. Factors that actually matter to you in a dark chocolate?

A: Taste, Brand, Availability

B: Brand

     More healthy that other chocolates

     Different taste than the usual chocolates    

5. Any features you think Cadbury Bournville does not have but should possess?

A: More of dry fruits

     It becomes soft if kept at room temperature

B: It has a standard packaging

     Should have smaller packs

     More variations

6. Do you know any benefit of having dark chocolates?

A: Good for heart

Less calories

B: Not much idea, probably provides antioxidants

From the depth interviews, we could understand the purchase motivations of buyers and their knowledge level, preferences and perceptions about dark chocolates and their usage patterns and hence formulate our research questions and hypotheses which are enlisted in the section below.

4.1.3 Formulation of research questions and hypotheses

The exercise of FGD, in-depth interviews and content analysis helped us get an idea of the important factors which will affect consumer buying behaviour. The formulation of research questions was done after that. The factors that were perceived to be important while buying soap were found to be Price, Brand, Color, Fragrance, Skin Friendliness and Packaging. The various hypotheses were related to the above factors.

Research questions and hypotheses:

(I) RQ 1: Are consumers aware of the dark chocolates?

H0: Consumers are aware of the dark chocolate in India

H1: Consumers are not aware of the dark chocolate in India

(II) RQ 2: Is it feasible to launch new products/ variants of dark chocolates to the Indian market?

H0: Consumers in India are inclined towards buying dark chocolates

H1: Consumers in India are not inclined towards buying dark chocolates

(III) RQ 3: Is price an important factor determining sales of dark chocolates?

H0: Consumers are price sensitive towards dark chocolates

H1: Buyers are not price sensitive towards dark chocolates

 (IV) RQ 4: Are consumers aware of the benefits of dark chocolate?

H0: Consumers are aware of the benefits of dark chocolate in India

H1: Consumers are not aware of the benefits of dark chocolate in India

(V)RQ 5: Can dark chocolate buyers be divided into different segments?

H0: There are distinct segments of buyers of dark chocolates.

H1: There are no distinct segments of buyers of dark chocolates.

(VI) RQ 1: Do these attributes of the dark chocolate play an important role in consumer buying behaviour?

H0: Customers are influenced by the bitterness in making their purchase decision.

H1: Customers are not influenced by the bitterness in making their purchase decision.

H0: Customers are influenced by price in making their purchase decision.

H1: Customers are not influenced by packaging in making their purchase decision.

H0: Customers are influenced by availability in making their purchase decision.

H1: Customers are not influenced by availability in making their purchase decision.

H0: Customers are influenced by size of the bar in making their purchase decision.

H1: Customers are not influenced by size of the bar in making their purchase decision.

H0: Customers are influenced by advertising in making their purchase decision.

H1: Customers are not influenced by advertising in making their purchase decision.

4.2 Conclusive Research

4.2.1 Descriptive Research

Descriptive research is used to determine the consumer’s perception of dark chocolate brands in order to be able to understand the relative positioning in the market. In the descriptive research, the primary emphasis is on data collection through a survey. It includes selecting the right kind of respondents, designing an appropriate questionnaire, collecting the data preparing it, and finally concluding with the findings of the research tools. In the next part, we deal with the process after data collection that includes data preparation like data recording, editing etc. Thereafter the hypothesis would be tested using the appropriate research tools. To conclusively test the hypotheses formed earlier, we conducted surveys to get data from different segments of consumers. Typically we followed structured data collection process and prepared a fixed alternative questionnaire.

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Sampling Plan:

1. Target population:

A sampling plan for conducting the survey was charted out with the target population being residents across the country through several age groups.

2. Sampling frame:

There is no specific sampling frame employed. The methodology for selecting the survey respondents and rationale for questionnaire follows.

3. Sampling technique:

The study is a cross sectional study because the data were collected at a single point of time. For the purpose of present study, a related sample of population was selected on the basis of convenience.

Rationale for Convenience Sampling-

• It is the least expensive
• It is the least time-consuming
• The sampling units will be easily accessible, easy to measure, and co-operative

4. Sample size and design:

• Sample size-A sample of 150 people will be taken on the basis of convenience. The actual consumers will be contacted on the basis of random sampling.
• Data collection mode-Online questionnaire
• Research period- Research work is carried out for a period of 2-3 weeks
• Research Instrument-The research work is carried out through self-administered questionnaires. The questions included dichotomous and offer multiple choices.

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5. Data preparation

5.1 Questionnaire Design

The questionnaire has been designed keeping the marketing research guidelines in mind. Extreme care will be taken to include respondents from varied segments and backgrounds and the respondents sample will be selected among different age groups.

5.2 Questionnaire flowchart

5.3 Data Analysis Plan

The research question RQ 1 is answered by question no.3 of the questionnaire. Here, we calculate the percentage of respondents who answer in the affirmative and in the negative. If the no. of people in affirmative is greater than 50% we accept the null hypothesis H0. To answer the research question RQ2 we consider the question no.9 of the questionnaire. Here, we have used the interval scale which stretches from -2 to +2. We will sum these scores of all the respondents and if it turns to be greater than zero, we accept the null hypothesis. Also, we calculate the mean of all the options in the question. Then we perform ANOVA to find out whether people are indifferent between the options .Also, the option having the highest mean would be the most preferred one. To answer RQ3 we consider question no. 8. Here we have an interval scale stretching from 1to 5. We calculate the sum of scores of all the respondents. If it comes to be more than 3x where x is the no. of respondents, it indicates the preference for price. Also, if the mode is greater than 3 then we accept the null hypothesis.

To answer RQ4 we consider question no. 6 and 7. We consider the percentage of people answering in the affirmative for each of the above questions. If the no. comes out to be more than 50% then we accept the null hypothesis. To answer RQ5 we consider the question no. 10 to 14. If there is one combination of the above that stands out from the rest then we accept the null hypothesis. To answer RQ6 we consider the question no. 8. Here, the marking is on an interval scale ranging from 1 to 5.If the total score of the respondents comes out to be greater than 3x where x is the no. of respondents then we accept the hypothesis provided the mode is also greater than 3. This is done for all the attributes mentioned in the research question.

Also, we carry out ANOVA on question no.8 to find out if there is a significant difference in the preference of the respondents between attributes. This will help us in promoting the product in accordance with the most preferred attribute.

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Questionnaire

1. Do you like chocolates?  

1. Yes (You can skip question 5)    
2. No

2.  Why do you not like chocolates? (You can jump to question 13)

1. Health concern
2. Do not like the taste
3. Do not want to spend for chocolates
4. Other reason, Please specify _________

3. Have you heard of dark chocolates?

1. Yes
2. No (You can jump to question 13)

4. What type of chocolate do you often eat?  

1. Milk Chocolate (You can skip question 9)
2. Dark Chocolate (You can skip question 8)
3. Both (You can skip question 8)

5. Why do you not prefer dark chocolate? [You can choose more than one option] (You can skip questions 6 and 7)

a) I dislike the bitter taste

b) I dislike the hardness  

c) I find it costly

d) Any other reasons (Please specify) _______________

6. Why do you like dark chocolate? (For those who choose (b or c) in qn 3) (You can choose more than one option)  

a) It is healthy

b) I love the bitter taste

c) I view eating it as status symbol

d) Any other reasons (Please specify) _____________

7. What do you think are the possible outcomes after eating dark chocolate in the long run?

1. Risk of heart diseases Increase         Risk of heart diseases Decrease         Don’t know
2. Blood pressure Increase                 Blood pressure Decrease                 Don’t know
3. Stress Increase                                Stress Decrease                         Don’t know
4. Blood sugar level Increase                 Blood sugar level Decrease                 Don’t know

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8. Rate these parameters on their influence in your purchase decision of dark chocolates        

9. Which of these new variants of dark chocolates would you be willing to buy? (Matrix)

10. Name: __________________________

11. Age:

1. Less than 20 years          b) 20-30 years         c) 30-40 years                d)Above 40 years

12. Gender:

1. Male                b) Female

13.     Education:

1. Class 10th        b) Class 12th                    c) Graduate                d) Post Graduate

14. Income (per annum):

1. Less than 2 lakhs                                
2. 2 lakhs – 5 lakhs
3. 5 lakhs -  10 lakhs                        
4. Above 10 lakhs
5. Do not want to reveal

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References

1. Marketing Research, an applied orientation, Malhotra and Dash
5. The Irish Times, Business 2000-Fifth Edition
6. Business Standard-Mumbai June 15, 2008, 4:32 IST

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