PROJECT REPORT ON CADBURY'S MARKETING STRATEGIES SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSI

NESS ADMINISTRATION 2009-10 UNDER THE GUIDANCE OF Mrs. MINISHA FACULTY, MAIMS SU BMITTED BY: ANKUSH GUPTA Roll no8460 Batch No.(BBA SEM 3rd B Section) MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES Affiliated to Guru Gobind Singh Indraprastha University, Delhi PSP Area, Plot No. 1, Sector 22, Rohini Delhi 11 0086

Table of contents S.N.O 1. 2. 3. 4. 5. CONTENTS Student declaration Certificate from guide Acknowledgement Executive Su mmary Chapter 1 1.1 Introduction 1.2 Relevence of studies 1.3Objectives of the p roject PAGE NO. 6. 7. 8. 9 10 1.4 Research Methodology Chapter 2 Company Profile Chapter 3 Results and Analysi s Chapter 4 Suggestions Chapter 5 Conclusions and Limitations Bibliography 2

STUDENT UNDERTAKING This is to certify that I have completed the Project titled Cadbury`s marketing stra tergies in Maharaja agrasen institute of management studies under the guidance of Mr s. MINISHA in partial fulfillment of the requirement for the award of degree of B achelor of Business Administration at Maharaja Agrasen Institute of Management S tudies, Delhi. This is an original piece of work & I have not submitted it earli er elsewhere. Name of the student ANKUSH GUPTA 3

CERTIFICATE This is to certify that the project titled Cadbury`s marketing strategies is an acad emic work done by ANKUSH GUPTA submitted in the partial fulfillment of the require ment for the award of the degree of Bachelor Of Business Administration from Mah araja Agrasen Institute of Management Studies, Delhi, under my guidance & direct ion. To the best of my knowledge and belief the data & information presented by him/her in the project has not been submitted earlier. Name of the Faculty Guide Mrs. MINISHA 4

ACKNOWLEDGEMENT This project work, which is my first step in the field of professionalism, has b een successfully accomplished only because of timely support of my well wishers. I would like to pay my sincere regards and thanks to those, who directed me at every step in my project work. First of all, I would like to express my thanks to Dr. N.K Kakar (director, MAIM S) for giving me such a wonderful opportunity to widen the horizons of my knowle dge. I extend my thanks to my project guide Mrs. MINISHA for her scholarly guidance, constant supervision and encouragement. It is due to her personal interest and i nitiative that the project work is published in the present form . Last but not the least, I would also thank all the staff members of MAIMS, friends and parent s who have directly or indirectly contributed in making this project a success. It is a tribute for there valuation. Despite all efforts, I have no doubt that error and obscurities remain that seen to afflict all writing projects and for which I am culpable. 5

EXECUTIVE SUMMARY Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. They employ around 50,000 people and have di rect operations in over 60 countries, selling the products in almost every count ry around the world. In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Prad esh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai. Their core purpose "creating brands people love" captures the spirit of what They are trying to achieve as a business. They collaborate an d work as teams to convert products into brands. Simply put, They spread happine ss! Currently Cadbury India operates in four categories viz. Chocolate Confectionery , Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery busin ess, Cadbury has maintained its undisputed leadership over the years. Some of th e key brands are Cadbury Dairy Milk, 5 Star, Perk, clairs and Celebrations. Cadbu ry enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Their flagship 6

brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in Ind ia. The pure taste of CDM defines the chocolate taste for the Indian consumer. Since 1965 Cadbury has also pioneered the development of cocoa cultivation in In dia. For over two decades, they have worked with the Kerala Agriculture Universi ty to undertake cocoa research and released clones, hybrids that improve the coc oa yield. Thier Cocoa team visits farmers and advises them on the cultivation as pects from planting to harvesting. They also conduct farmers meetings & seminars to educate them on Cocoa cultivation aspects. Their efforts have increased coco a productivity and touched the lives of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree! Today, they are poised in thier leap towards quantum growth. They are a part of the Cadbury PLC, worlds leading Confectionery Company , and their moto is to co ntinue to spread happiness! 7

CHAPTER 1 INTRODUCTION RELEVANCE OF STUDY Today's Indian chocolate market, an overview Chocolate consumption in India is extremely low. Cadbury dominates the chocolate market with about 70% market share. Nestle has emerged as a significant competi tor with about 20% market share. Key competition in the chocolate segment is fro m co-operative owned Amul and Campco, besides a host of unorganized sector playe rs. There exists a large unorganized market in the confectionery segment too. Le ading national players are Parrys, Ravalgaon, Candico and Nutrine. MNCs like C adbury, Nestle, Perfetti, are recent entrants in the sugar confectionery market. Other competing brands such as GCMMFs Badam bar and Nestl`s Bar One have minor ma rket shares. Chocolate consumption in India is extremely low. Per capita consumption is aroun d 160gms in the urban areas, compared to 8-10kg in the developed countries. In r ural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a snack food. Indian chocolate market grew at the rate of 10% pa in 70s and 80s, driven mainly by the children segment. In the late 80s, when the mar ket started stagnating, Cadbury repositioned its Dairy Milk to any time product rather than an occasional luxury. Its advertisement focused on adults rather tha n children. Cadburys Five Star, the first count 8

chocolate, was launched in 1968. Due to its resistance to temperature, the choco late has become one of the most widely distributed chocolate in the country. In the early 90s, high cocoa prices compelled manufacturers to raise product pr ices and reduce their advertisement budget affecting the volumes significantly. The launch of wafer chocolates Kit Kat and Perk spurred volume growth in the mid 90s. These chocolates positioned as snack food rather than on the indulgence p latform compete with biscuits and wafers. A strong volume growth was witnessed i n the early 90s when Cadbury repositioned chocolates from children to adult con sumption. The mid 90s saw the entry of new players like Nestle, which created c ategories like wafer chocolate and spurred growth. Chocolate Manufacturing Cocoa, common name for a powder derived from the fruit seeds of the cacao tree a nd for the beverage prepared by mixing the powder with milk. When cocoa is prepa red, most of the cocoa butter is removed in the manufacturing process. After the fat is separated and the residue is ground, small percentages of various substa nces may be added, such as starch to prevent caking, or potassium bicarbonate to neutralize the natural acids and astringents and make the cocoa easy to dissolv e in liquids. Cocoa has a high food value, containing as much as 20 percent prot ein, 40 percent carbohydrate, and 40 percent fat. It is also mildly stimulating because of the presence of Theo bromine, an alkaloid that is closely related to caffeine. 9

The processing of the cacao seeds, better known as cocoa beans, is complex. The fruit harvest is cured or fermented in a pulpy state for three to nine days, dur ing which the heat kills the seeds and turns them brown. The enzymes activated b y fermentation impart the substances that will give the beans their characterist ic chocolate flavor later during roasting. The beans are then dried in the sun a nd cleaned in special machines before they are roasted to bring out the chocolat e flavor. They are then shelled in a crushing machine and ground into chocolate. During the grinding, the fat melts, producing a sticky liquid called chocolate liquor, which is used to make chocolate candy or is filtered to remove the fat a nd then cooled and ground to produce cocoa powder. The beans are sold in interna tional markets. African countries harvest about two-thirds of the total world ou tput; Ghana, Cte dIvoire, Nigeria, and Cameroon are the leading African cocoa pr oducers. Most of the remainder comes from South American countries, chiefly Braz il and Ecuador. The crop is traded on international commodity futures markets. A ttempts by producing countries to stabilize prices through international agreeme nts have had little success. Types of chocolate Sweet chocolate, usually dark in colour is made with chocolate liquor, sugar, co coa butter, and such flavourings as vanilla beans, vanillin, salt, spices and es sential oils. Sweet chocolate usually contains at least 25-35% chocolate liquor content. The ingredients are blended, refined (ground to a smooth mass), and con ched. Viscosity is 10

then adjusted by the addition of more cocoa butter, lecithin (an emulsifier), or a combination of both. Milk chocolate is formulated by substituting whole milk solids for a portion of the chocolate liquor used in producing sweet chocolate. It usually contains at l east 10% chocolate liquor and 12% whole milk solids. Manufacturers usually excee d these values, frequently going upto 12-15% chocolate liquor and 15-20% whole m ilk solids. Milk chocolates, usually lighter in colour than sweet chocolate, are milder in taste because of its lower content of bitter chocolate. Products And Segmentation Chocolate market can be segmented as follows: Large units bars/ slabs, Count lines, Panned varieties, Small value added units. Confectionery products can be categorized as Hard boiled sugar candies, lollipops, jellies Toffees Chewing candies Breath fre shners, digestives, throat relievers 11

Gum based products are Chewing gum Bubble gum TABLE 1.01 Chocolates and Confectionery Industry Chocolates Sugar confectionery Gum based Bars/ Slabs Hard boiled Chewing gum Count lines Toffees Sugar coated chewing gum Panned (Gems) Soft chew Bubble gum Eclairs Jelly candies Assorted Deposit candies Lollipops Mints, etc. 12

Chocolate Segmentation Chocolate market can be segmented into moulded chocolates, count chocolates, pan ned chocolates, clairs and assorted chocolates. SHARE OF CHOCLATES IN THE MARKET TABLE 1.02 Type of chocolates Moulded Count Eclairs Panned Others % Share in chocolate market 37% 30% 20% 10% 3% 13

SHARE OF COCLATE IN THE MARKET CHART 1.01 Others Panned 3% 10% Eclairs 20% Moulded 37% Moulded Count Eclairs Panned Others Count 30% Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premiu m, Nestle Milky Bar, is the largest segment accounting for more than 1/3rd of th e market. Count lines (5 Star, Perk, Kit Kat, and Picnic) are the second largest segment a ccounting for 30% of the volumes. The Count Line segment has been growing at a f aster pace during the last three years driven by growth in Perk and Kit Kat volu mes. Panned products include Cadburys Gems, Nutties, and Nestl`s Marbles. In panne d segment, Cadbury dominates with over 95% market share. clairs (droplets of hard caramels with soft chocolate fillings) are a low unit pr iced product. Cadbury clairs was launched in 1972. Parle Products launched Melody in 14

1991. Nestle is a recent entrant in the segment. Nutrines clairs has done extrem ely well in the market. Chocolates Market Share Cadbury is the market leader in all categories with over 65% market share. Its m ain competitor is Nestle India. Nestle has identified chocolate and confectioner y as one of the thrust areas for growth. It has launched some of its internation al brands like Quality Street, After Eight, and Lions in India. In 1998, Cadbury launched a new count bar Picnic. Nestle immediately followed it with the launch of Charge. Gujarat Co-operative Milk Marketing Federation (GCMMF), which is nor mally known as Amul and Central Arecanut and Cocoa Manufactures and Processors C o-operative (CAMPCO) are other two significant players. Both are local manufactu rers. MARKET SHARE TABLE 1.02 Moulded segment Cadbury Nestle GCMMF 70% 23% 5% Count segment Cadbury Nestle Campco 76% 20% 3% clairs Cadbury Nutrine Nestle 49% 37% 12% 15

Others 2% Others 1% Parrys Others 1% 1% Confectionery Confectionery, processed food based on a sweetener, which may be sugar or honey, to which are added other ingredients such as flavorings and spices, nuts, fruit s, fats and oils, gelatin, emulsifiers, colorings, eggs, milk products, and choc olate or cocoa. Confectionery, usually called candy in the United States, or swe ets in Great Britain, can be divided into two kinds according to their preparati on and based on the fact that sugar, when boiled, goes through different stages from soft to hard in the crystallization process. Typical of soft, or crystallin e, candysmooth, creamy, and easily chewed are fondants (the basis of chocolate cre ams) and fudge; typical hard, noncrystalline candies are toffees and caramels. O ther favorite confections include nougats, marshmallows, the various forms of ch ocolate (bars or molded pieces, sometimes filled), pastes and marzipan, cotton c andy (spun sugar), popcorn, licorice, and chewing gum. Records show that confectionery was used as an offering to the gods of ancient E gypt. Honey was used as the sweetener until the introduction of sugar in medieva l Europe. Among the oldest types of candies are licorice and ginger from the Far East and marzipan from Europe. Candy-making did not begin on a large scale unti l the early 19th century, when with the development of special candy-making mach inery it became a British specialty. In the U.S. the candy industry began to gro w rapidly during the mid-19th century with the invention of improved machinery a nd a cheaper process for powdering 16

sugar. In 1911 the first candy bars were sold in baseball parks; by 1960 candy b ars made up almost half of U.S. confectionery production. By the 1980s annual wo rld production of confectionery totaled many millions of kilograms. Confectionery Market Share The confectionery market is highly fragmented with several players with strong r egional presence. Leading national players are Nutrine, Parrys, Parle, Cadbury, Nestle, Ravalgon, Candico, Perfetti, Wrigleys and Joyco India. The entire marke t can be divided into 7 major categories, namely Hard Boiled Candies(HBC), Toffe es, Eclairs, Chewing Gum, Bubble Gum, Mints and Lozenges. While HBCs form 51% of the entire market, 18% is formed by toffees and 18% by chewing gum & bubble gum collectively. Eclairs form just 5% of the entire market. Mints and Lozenges for m 4% and 3% of the market respectively. Nutrine with a strong base in southern India has emerged as the reigning number one player in the sugar confectionery market with 24% share. Over last one year or so it has launched various products in the sugar confectionery market. It is the market leader in hard-boiled confectionery as well as toffees. It has share of 37% in eclairs market and is reigning at second position behind Cadburys. Nu trine gets around 50% of its turnover from southern India, 20% from Eastern regi on and rest equally from westerns and northern region. Its biggest brand is Maha lacto followed by Asay and Kokonaka respectively. Total tonnage sold by Nutrine in the confectionery market is around 36650 tonnes. 17

The second largest player, Parle has strong presence in orange candies (hard boi led) supported by its Melody toffees, Mango Bite and Kismi Toffee bar. Besides t his the company also has brands like Rola Cola, Poppins, Peppermint etc. in its portfolio.It has market share of 16% in the total confectionery market with a to nnage of 16800 tonnes. It is number two in both HBC and Toffee market with 30% a nd 21% market share respectively. Parrys has emerged as the third largest player in the market with 13% market sh are and a tonnage of 14500 tonnes.The company has brands like LactoKing, Coconut Punch, Madras Cafe, Coffy Bite etc. in its portfolio. Though in the over all co nfectionery market it is at number three, it is at par with Parle in toffees mar ket with 21% share. Cadbury has been one of the leaders with Cadbury eclairs with chocolate inside. It was the most successful in 1972 when it was launched because of its initial i ntroductory price of 25 paise and was instant hit. It continues to be one of the biggest brands. Cadbury made a foray into the sugar confectionery segment with Googly, a hardboiled sweet in late 1996.Googly the tangy, fizzy candy, Cadbury t ook the market by surprise and marked the entry of Trebor into the fast growing Indian market. The product is sold under license from Trebor Bassett, UK. Googly was extended nationally in early 1997. Cadbury has also launched Mocka, a coffe e based sugar confectionery. 18

SHARE IN SUGAR CONFECTIONERY MARKET TABLE1.04 Company Market share (%) Major brands Mahalacto, Kokonaka, HoneyFab, Aam Ras, Chuma- Chu ma, Gulkand, Funda, Gum Yum, Nutrine 24 Ole, Nutrine Eclairs,SuperStar, Caramella, Wild Coffy, Dishum, Aasay,Naturo, Fruit Bar Melody, Mango bite, Kismi, Poppins, Rola Parles 16 cola, LuxDairy, Peppermint, Rosemint Coffy Bite, Lacto king, Coconut punch, Parrys 13 Caramilk, Madras Cafe, Soft-Spot, Flavoured Candy, Mango, Sunshine, Shakti, Pine apple Googly, Mocka, English toffee, Cadburys 11 Frutus, Gollum, Eclairs, Pops. Polo, Allens Splash, Soothers, Toffo Butter, Nestle 8 Fruit Rings, Foxs Pan pasand, Mango mood, Coffee break, HiRavalgaon 7 soft, Supreme, Cherries, Juicy 19

Company Dabur P&G Warner Lambert Market Share 3% 2.5% 2.5% Hajmola Vicks Major brands Halls, Chiclets, Clorets Anti-cold/OTC brands such as Halls, Vicks, Clorets, etc are increasingly being s old on the fun positioning rather than for their medicinal properties, competing directly with other confectionery brands. Halls and Vicks are available in vari ous flavours. SHARE IN SUGAR CONFECTIONERY MARKET CHART 1.02 Others 21% Ravalgaon 7% Nestle 8% Cadburys 11% Nutrine 24% Parles 16% Parrys 13% Nutrine Nestle Parles Ravalgaon Parrys Others Cadburys 20

Financial Analysis Cadbury India net profit at Rs 190 million. Mumbai: Cadbury India Ltd has posted a net profit of Rs 190 million for the quarter ende d 16 June 2008 as compared to Rs 93.60 million for the quarter ended 17 June 200 7. The total income has increased from Rs million for JQ08. The other income for on (corresponding quarter last fiscal: million is on account of the profit on e, Maharashtra. 1,206.80 million for JQ07 to Rs 1,363.40 the current quarter is at Rs 127.70 milli Rs 21.90 million) out of which Rs 107.70 sale of excess immovable property at Than

Cadbury had sold the land near its factory at Thane for Rs 11 crore early this y ear. The company says it has struck an agreement with Kalpataru Properties, Than e, for selling the land, which measured about 27,520 square metres. The deal hel ped Cadbury unlock the value of its investments and helped it to shore up its bo ttomline. Recently Cadbury India also refurbished its old office block in Mumbai and is no w planning to lease out the extra space available after the renovation, with a v iew of earning some funds. 21

Cadbury India has three factories, which it operates on its own, while three oth er facilities are run through arrangements with third parties. To overcome the negative impact of sluggishness in the fast-moving consumer good s market on its performance, the company undertook cost-cutting exercises over t he past one year, say analysts. As a future strategy, it plans to reduce manufact uring and supplychain costs. During the past few months, Cadbury India had offere d a voluntary retirement scheme to 29 employees in order to bring down costs. Cadbury recently hiked its stake in the Indian company to 90 per cent by buying out around 39 per cent of the public shareholding. Cadbury India has already mad e an application for delisting. 22

Cadbury India Ltd Brief Financials (in Rs. Mn.) Detailed Quarterly TABLE 1.05 31 -Dec-2006 Period ending (months) 28-Dec-2008 (12) 29-Dec-2007 (12) (12) Net sale s Other Income Total Income Cost of goods sold OPBDIT PAT Gross Block Equity cap ital EPS (Rs.) DPS (Rs.) BV (Rs.) P/E range (x) Debt / Equity (x) Operating marg in (% of OI) Net margin (% of OI) 7298.11 93.32 7391.43 6293.08 1098.34 456.50 3 267.69 357.10 12.78 2.00 99.78 0.0 - 0.0 0.03 14.9 6.2 6846.58 11.45 6858.03 568 3.02 1175.01 727.21 2860.47 357.10 20.36 2.00 89.71 0.0 - 0.0 0.04 17.1 10.6 625 8.34 13.98 6272.32 5163.55 1108.77 595.40 2690.13 357.10 16.67 6.00 70.73 0.0 0.0 0.03 17.7 9.5 23

OBJECTIVE OF THE PROJECT 1. The study of pricing of different products of Cadbur y`s and techniques used to maximize the profit. 2. The study of strategy of Cadbur y of increasing their profit by introducing new product. 3. The study of compari son of Cadbury and its competitors competitors. 4. The study of cadbury`s place in market. 5. The study of ongoing battle in the confinery market. 6. The difficul ties, which Cadbury had faced, in past years . 24

RESEARCH METHOLOGY It refers to the method adopted to collect the relevant data and other informati on, which forms the basis of the thesis writing. So for the effective writing of the thesis report, the data must be quality oriented. My research is divided in to two stages: STAGE I: Data Source. Secondary Data- Secondary data represents information that already exists somewhere, having been collected for another purpose. The second ary data sources that came to be utilized by me in these were as followsI Intern al Sources- In-house magazine - Annual Reports of the banks - Corporate magazine s etc II. External Sources- British counsil library - college library - Internet services STAGE II: Analysis In this stage all the collected data had been analy zed and then a Report had been written. 25

LITERATURE REVIEW Cadburys holds its price, despite its troubles Independent, T he (London), Nov 17, 2006 by Andrew Dewson Some traders are convinced that something is going on at Cadbury Schweppes. Desp ite a "sell" recommendation from the broker Goldman Sachs on Wednesday and yeste rdays confirmation of an investigation into alleged accounting malpractice at i ts 50 per centowned Nigerian operations, the shares still managed to close in po sitive territory. The Nigerian operation is a tiny part of Cadburys business, but the market neve r likes to get wind of accounting problems. EMI Group shares lost more than 15 p er cent when it discovered accounting fraud at its Brazilian operations three we eks ago - the shares have still not recovered. Cadburys closed 5p firmer at 532p, valuing the group at more than [pound]15bn, including debt. The word among traders is that Cadburys is poised to face a tak e over, most likely from a private equity group, in what would be the largest ev er UK buyout. Traders said a change of management might be the best way for it t o move forward and that could mean an attempt to take it into private hands. The insurance sector remained in focus following Legal& Generals promise to ret urn [pound]1bn to investors and a round of corporate activity speculation. The S wiss investment bank UBS raised its target for the shares to 165p as it reiterat ed its "buy" advice, sending the shares 3.25p better to 149.75p. Meanwhile, Roya l& SunAlliance firmed another 1.5p to close at 153p as bid talk continued to do the rounds. 26

It has been five years since shares in Aggreko traded at 400p; the power supply groups stock collapsed to 100p in late 2001, but the turnaround looks to be com plete. A bullish trading update yesterday surprised even the most upbeat analyst s. ABN Amro, Citigroup and Evolution Securities published upbeat notes as the shares cl imbed 19p to close at 404p. Shares in the London Stock Exchange had another bad day on the back of news that a consortium of investment banks is putting togethe r a rival exchange. The shares fell through 1,200p for the first time since the beginning of September before a late afternoon rally saw the stock close 4p wors e at 1,230p. 27

CHAPTER 2 COMPANY PROFILE Throughout history chocolate has been associated with romance and sharing. Today the richness and smoothness of Cadbury chocolate is what makes it one of the wo rlds favorite treats. Discover everything here that you want to know about Cadbury and chocolate, from historical facts to delicious recipes. You`ll also find facts about our exciting new product such as Cadbury snaps and Cadbury dairy milk wafer. Think delicious chocolate, think Cadbury. 28

History of the company Cadbury has been synonymous with chocolate since 1824, wh en John Cadbury opened his first shop, establishing a flourishing dynasty that t oday provides the world with many of its favorite brands of chocolate. Learn about the fascinating history of chocolate: How cacao is the Mayan word fo r God Food`; when and how chocolate was first introduced to Europe; how xocolatl a b itter frothy drink, beloved by Montezumamade the transaction into food centuries later, how it`s reputation for heightening pleasure made it the stuff of myth and legend. Discover the history of Cadbury, from its social pioneering to the perfection of the 29

recipe for Cadbury Dairy Milk; first launched in 1905, and still a market leader today. Find out all there is to know about making chocolate, and amaze yourself with the brand stories and brand timeline that show how many Cadbury brands hav e been favorites since the early 1900s When chocolate finally reached England in the 1650s, the high import duties on c ocoa beans meant it was a drink only for the wealthy. Chocolate cost the equival ent of 50-75 pence a pound (approximately 400g), when pound sterling was worth c onsiderably more than it is today. Gradually chocolate became more freely availa ble. In 1657, Londons first Chocolate House was opened by a Frenchman, who prod uced the first advertisement for the chocolate drink to be seen in London: The history of Cadbury as manufacturers of chocolate products in Birmingham date s back to the early part of the 19th century, when John Cadbury opened a shop in the centre of the city, trading as a coffee and tea dealer. Soon a new sideline was introduced - cocoa and drinking chocolate, which he prepared himself using a mortar and pestle. His lifelong involvement with the Temperance Society led hi m to provide tea, coffee and cocoa as an alternative to alcohol, believed to be one of the causes of so much misery and deprivation amongst working people in Br itain at that time. Fashionable chocolate houses were soon opened where the people could meet friend s and enjoy various rich chocolate drinks, many of which were rather bitter to t aste, while discussing the serious political, social and business affairs of the day or gossiping 30

The Cadbury family were closely involved in the evolution of drinking chocolate. From his grocery shop in Birmingham, where he sold mainly tea and coffee, John Cadbury started preparing cocoa and drinking chocolate, using cocoa beans import ed from South and Central America and the West Indies. He experimented with a mo rtar and pestle to produce a range of cocoa and drinking chocolates with added s ugar. By 1831 the cocoa and drinking chocolate side of the business had expanded, so h e rented a small factory in Crooked Lane not far from his shop and became a man ufacturer of drinking chocolate and cocoa. This was the real foundation of the Cadbury manufacturing business as it is today. The earliest preserved price list of 1842 shows that John Cadbury sold sixteen lines of drinking chocolate and co coa in cake and powder forms. Customers would scrape a little off the block and mix it with hot milk or water. A solid chocolate for eating was introduced by Jo hn Cadbury in 1849, which by todays standards wouldnt be considered very palat able. In 1866 George Cadbury (John s son) brought to England a press developed in Hol land by Van Houten. The press changed the face of cocoa and chocolate production , as it was designed to remove some of the cocoa butter, enabling a less rich an d more palatable drink to be produced. There was no longer any need to add the v arious types of flour and Cadburys new cocoa essence was advertised as Absolut ely pure...therefore Best. 31

Established by Richard and George Cadbury, two Victorian businessmen with great industrial and social vision, Bourneville Village is a story of industrial organ ization and community planning covering well over a century. It embraces the bui lding of a factory in a pleasant green environment (in stark contrast to the o ppressive conditions of the Victorian industrial scene), the enhancement of empl oyees working conditions and overall quality of life and the creation of a vill age community with a balanced residential mix (both employees and non-employees) . George Cadbury was a housing reformer interested in improving the living conditi ons of working people in addition to advancing working practices. Having built s ome houses for key workers when the Bourneville factory was built, in 1895 he bo ught 120 acres near the works and began to build houses in line with the ideals of the embryonic Garden City movement. Motivation for building the Bournville Vi llage was two-fold. George Cadbury wanted to provide affordable housing in pleas ant surroundings for wage earners. But as the Bournville factory grew, local lan d increased in value and was ready to fall into the hands of developers. The las t thing the brothers wanted was that their factory in a garden would be hemmed in by monotonous streets. Dame Elizabeth Cadbury was involved in the planning of Bourneville with her husb and, George. Her memoirs tell us how these plans became reality: 32

"When I first came to Birmingham and we were living at Wood Brooke, morning afte r morning I would walk across the fields and farmland between our home and the W orks planning how a village could be developed, where the roads should run and t he type of cottages and buildings. Gradually this dream became reality, houses arose and many of the first tenants being men in Mr Cadburys Adult School Class - which met every Sunday morning at 8.00am in Bristol Street - who had previously lived in the centre of the city a nd had never had a garden. Also workers in the factory became tenants. They too enjoyed their homes in the healthy surroundings, cultivating their gard ens, rewarded in many instances by splendid crops of apples from the belt of app le trees which each tenant found at the bottom of his garden." The consequent availability of cocoa butter led to the development of the smooth creamy chocolate we know today. Manufacturing process Cadbury makes a variety of chocolates for different purposes but the two main ty pes are Cadbury Dairy Milk, milk chocolate and Cadbury Bourneville plain chocola te. 33

The taste and texture of Cadbury chocolate are based on long traditions of exper tise in recipe and processing unique to Cadbury. Techniques are improving all th e time and new technology enables the whole process to be finely tuned to match evolving tastes and preferences. Production starts at the Chirk cocoa factory, where the highest quality cocoa be ans are processed to produce cocoa mass containing 55% cocoa butter plus extract ed cocoa butter, the basis for all chocolate products. When plain chocolate is made the mass goes straight to the Bourneville factory in Birmingham while the mass for milk chocolate production is taken to the Ca dbury milk factory at Marl brook, Herefordshire, in the heart of English dairy c ountry. At the milk processing factory fresh liquid full cream milk is cooked with sugar and condensed to a thick liquid. Cocoa mass is added, making a rich creamy choc olate liquid, which is then evaporated to make milk chocolate crumb. As these in gredients are cooked together the very special rich creamy taste of Cadbury choc olate is produced. 95,000 tonnes of crumb a year are produced at Marl brook to b e made into chocolate at the Cadbury chocolate factories at Bourneville, Birming ham and Somerdale, Bristol. On arrival at the chocolate factory the crumb is pulverized by heavy rollers and mixed with additional cocoa butter and special chocolate flavorings. The amount of cocoa butter 34

added depends on the consistency of the chocolate required: thick chocolate is n eeded for molded bars, while a thinner consistency is used for assortments and c overed bars. In the UK up to 5% vegetable fat is added to compensate for variations in cocoa butter, allowing the melting properties of the chocolate to be controlled to a p recise standard, and preserving the full taste and texture of the chocolate. Cad bury use carefully selected vegetable oils similar in nature to cocoa butter: Af rican Shea, Indian Sal and Malaysian Palm oils are all part of the recipe. Both milk and plain chocolate, which has had sugar and cocoa butter added to the mass before pulverizing, undergo the same final special production stages, prod ucing the famous smoothness, gloss and snap of Cadbury chocolate. CADBURY PRODUCTS Cadbury Perk 35

A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury l aunched its new offering; Cadbury Perk in 1996. With its light chocolate and waf er construct, Cadbury Perk targeted the casual snacking space that was dominated primarily by chips & wafers. With a catchy jingle and tongue in cheek advertisi ng, this anytime, anywhere snack zoomed right into the hearts of teenagers. Raageshwari started the trend of advertising that featured mischievous, bubbly t eenagers getting out of their stuck and hungry situations by having a Cadbury Perk. Cadbury Perk became the new mini snack in town and its proposition "Thodi si pet pooja" went on to define its role in the category. As the years progressed, so did the messaging, which changed with changes in the consumers way of life. To compliment Cadbury Perks values, the bubbly and viv acious Preity Zinta became the new face of Perk with the hunger strike commerc ial in the mid 90s. 36

In the new millennium, Cadbury Perk moved beyond just owning hunger to a "Kabh i bhi kaise bhi" position, because the urge for Cadbury Perk could strike anytim e and anywhere. With the rise of more value-for-money brands in the wafer chocolate segment, Cad bury Perk unveiled two new offerings - Perk XL and XXL. The temptation to have more of Cadbury Perk was made even greater with the launc h of Cadbury Perk Minis in 2003 for just Rs. 2/In 2004, with an added dose of Real Cadbury Dairy Milk and improved wafer, Pe rk became even more irresistible. The product was supported in the market with a new look and a new campaign. The advertisement spoke of the irresistible aspect of the brand, with Baaki sab Bhoola de becoming the new mantra for Cadbury Pe rk. Did you know: Cadbury Perk advertising has been a launch pad for Bollywood stars - Preity Zinta, Raageshwari, Gayatri Joshi and Amrita Rao, were all Perk models before they made it big on cinema screens. Cadbury Five Star Chocolate lovers for a quarter of a century have indulged their taste buds with a Cadbury 5 Star. A leading knight in the Cadbury portfolio and the second large st after Cadbury 37

Dairy Milk with a market share of 14%, Cadbury 5 Star moves from strength to str ength every year by increasing its user base. Launched in 1969 as a bar of chocolate that was hard outside with soft caramel n ougat inside, Cadbury 5 Star has re-invented itself over the years to keep satis fying the consumers taste for a high quality & different chocolate eating experi ence. One of the key properties that Cadbury 5 Star was associated with was its classi c Gold colour. And through the passage of time, this was one property that both, the brand and the consumer stuck to as a valuable association. Cadbury 5 Star was always unique because of its format and any communication hig hlighting this uniqueness, went down well with the audiences. From deliciously rich, youd hate to share it in the 70s, to the lingering taste of togetherne ss & Soft and Chewy 5 Star in the late 80s, the communication always paid ho mage to the product format. More recently, to give consumers another reason to come into the Cadbury 5 Star fold, Cadbury 5 Star Crunchy was launched. The same delicious Cadbury 5 Star was now available with a dash of rice crispies. Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend. Th is different and delightfully tasty chocolate is well poised to rule the market as an extremely successful brand. Cadbury Dairy milk 38

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K., bu t the journey with chocolate lovers in India began in 1948. The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when th ey think of Cadbury Dairy Milk. The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of Cadbury Dairy Milk with a variety of ingredients and are very popular amongst t eens & adults. Recently, Cadbury Dairy Milk Desserts was launched, specifically to cater to the urge for something sweet after meals. Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie, ch ocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a delightful combination of milk chocolate and white chocolate. Giving consumers a n exciting reason to keep coming back into the fun filled world of Cadbury. 39

Our Journey: Cadbury Dairy Milk has been the market leader in the chocolate category for year s. And has participated and been a part of every Indians moments of happiness, joy and celebration. Today, Cadbury Dairy Milk alone holds 30% value share of th e Indian chocolate market. In the early 90s, chocolates were seen as meant for kids, usually a reward or a bribe for children. In the Mid 90s the category was re-defined by the very p opular Real Taste of Life campaign, shifting the focus from just for kids to the kid in all of us. It appealed to the child in every adult. And Cadbury Da iry Milk became the perfect expression of spontaneity and shared good feeling s. The Real Taste of Life campaign had many memorable executions, which people st ill fondly remember. However, the one with the "girl dancing on the cricket fiel d" has remained etched in everyones memory, as the most spontaneous & un-inhibi ted expression of happiness. This campaign went on to be awarded The Campaign of the Century, in India at t he Abby (Ad Club, Mumbai) awards. In the late 90s, to further expand the category, the focus shifted towards wide ning chocolate consumption amongst the masses, through the Khanewalon Ko Khane Ka Bahana Chahiye campaign. This campaign built social acceptance for chocolate consumption amongst adults, by showcasing collective and shared moments. 40

More recently, the Kuch Meetha Ho Jaaye campaign associated Cadbury Dairy Milk with celebratory occasions and the phrase "Pappu Pass Ho Gaya" became part of s treet language. It has been adopted by consumers and today is used extensively t o express joy in a moment of achievement / success. The interactive campaign for "Pappu Pass Ho Gaya" bagged a Bronze Lion at the pr estigious Cannes Advertising Festival 2006 for Best use of internet and new med ia. The idea involved a tie-up with Reliance India Mobile service and allowed s tudents to check their exam results using their mobile service and encouraged th ose who passed their examinations to celebrate with Cadbury Dairy Milk. The Pappu Pass Ho Gaya campaign also went on to win Silver for The Best Integr ated Marketing Campaign and Gold in the Consumer Products category at the EFFIES 2006 (global benchmark for effective advertising campaigns) awards. During the 1st World War, Cadbury Dairy Milk supported the war effort. Over 2,00 0 male employees joined the armed forces and Cadbury sent books, warm clothes an d chocolates to the front. 41

Cadburys big Bytes Kuch meetha ho jaye suggests Cadbury India, its brand ambassador Amitabh Bachcha n smiling down the hoardings lined along Mumbais Marine Drive right down to the companys corporate head office at Mahalakshmi. While the chocolate major is wa iting for Diwali to see a turnaround in its business after the worm`s controversy, at the moment its all about driving growth for the category, which has seen a decline since the first quarter of this year. Being the market leader in chocolates with a 70 per cent share, the company has attempted to stretch the boundaries within chocolate confectionery. It has also been adventurous in unleashing a brand new category within chocolate early this year. Introducing the concept of sweet snacking, it launched Cadbury Bytes in th e south with the positioning Snacking ka meetha funda. The product is a crunch y wafer pillow with a choco-cream centre and is being rolled out nationally. 42

Explaining the need to introduce this new category, Bharat Puri, Managing Direct or, Cadbury India, says, "While we were sure of our core competencies, there was need for innovation to deliver double-digit growth. What we found was that we w ere underrepresented in the area of snacking on the go and that there was a need for a light crunchy snack." While entry into salted snacks was ruled out, sweet snacks were the obvious choice, and Bytes is unique to the chocolate majors In dian portfolio. Getting the right product and packaging was a challenge for the company. It has subcontracted the product to get the volumes and is poised for a national launch . Adds Puri, "After all this was the first category anywhere in the world that C adbury was entering and we did not have the expertise. So the best way was to te st-market the product and today we find that it has already bagged five per cent of the chocolate market." The company has no apprehensions of cannibalization of its chocolate brands. It believes that while its chocolates are more of indulgence products, Bytes is abo ut snacking when one is hungry and can be treated as a snack in between meals. 43

In the past when Cadbury tried out a biscuit brand, Chocobix, there was fear abo ut some amount of cannibalization. After all, it was simply a biscuit coated in chocolate, and was perceived to be another chocolate brand in Cadburys portfoli o. Stresses Puri, "Cadbury Bytes is adjacent to chocolates and in the markets that we have launched it, there has been no cannibalization. Chocolates is largely an indulgence product while Bytes is about between-meals snacking. A product which is consumed when one is feeling hungry or peckish." Another thrust area Cadbury has been re-evaluating is confectionery. While growt h rates in this segment are healthier compared to chocolates, it has always been a difficult market 44

to crack. Cadburys own experiences have led it to withdraw certain brands but n ow with Warners Lamberts international kitty under its fold, there are chances of reconsidering the segment once again. "Through the acquisition of Warner Lambert, there is a great set of brands alrea dy available to us. We are still examining which are the right brands for the In dian market," says Puri. Cadbury has already identified Halls as the strongest b rand in Warner Lamberts portfolio and re-launched the brand early this year. Ad ds Puri, "Halls was not doing well for a while so we re-launched it this year. W hen you have the existing assets, it is necessary to get them right first. Halls is the first brand that we have revived and it is now doing well." In April 2003, Cadbury Indias foreign parent acquired Pfizers interests in the confectionery business for $4.2 billion. That included the Warner-Lambert produ ct portfolio, known best for Halls, Clorets and Chiclets. The acquisition is now poised to become a growth area for Cadbury India, whose confectionery brands in clude clairs and Googly. But instead of selling confectionery through its existin g chocolate network, Cadbury has set up an entirely new network. While Halls has been revived with new packaging, there has been no change in the status of its other brands. Chiclets had been discontinued long before it belon ged to Cadbury and Clorets continues to sell with a small franchise. But now Cad bury is looking closely at Warner Lamberts gums portfolio (it is one of the wor lds largest gum manufacturers) and is considering its viability for the Indian market. Sugarless gum brands such as 45

Dentyne Ice and Trident White have been known for their functional benefits worl dwide but steep pricing may be a deterrent to their entry into the country. "The gum market has not done well in India. But gum has functional properties an d is not merely a breath freshener. We are now evaluating whether there is a mar ket for them in India and whether it is going to be worth our while," says Puri. The confectionery market may be huge in volumes but making money on it remains a tough task with its low margins. Governed by price points, one can sell at only at a Re 1 or 50 paise unit price. "The issue is not of garnering volumes but ma king money out of those volumes. The offer should be one which can get you both top and bottom lines," states Puri. Having shifted focus from Googly, Cadbury ha s tasted success with its ageold clairs which continue to bag almost 50 per cent of the market. "There ent in market sition h. is scope in the market. Our clairs has been growing and this has been evid our past numbers," claims Puri. At the same time the sugar confectionery is highly competitive and its all about finding the right consumer propo and a business model that can deliver both top line and bottom line growt

In spite of the new categories being explored by Cadbury, its star brand remains Cadbury Dairy Milk (CDM), which continues to corner almost 30 per cent of the c hocolate market. It is followed by brands such as 5-star, perk and Gems. Each of these has been revamped over the years to generate excitement for the category. For instance, recently Perk was rejuvenated as a crunchier wafer while CDM came up as a white-and-brown variant in the market. 46

"The chocolates category thrives on excitement. Its all about giving the consum er a choice and taste which they enjoy," adds Puri. For instance, in beverages, in spite of its malted food brand Bournvita, Cadbury decided to introduce a milk additive brand such as Delite, just to give its consumers the real taste of cho colate. Delite has added flavors such as strawberry and mango and is not expecte d to encroach upon Bournvita`s shares. According to Puri, "There is still a large section of people who do not add anything to milk. This will apply to children f or whom milk is a problem and having an additive will make it a pleasurable expe rience." Making changes in its distribution network, Cadbury split its sales and marketin g team between its mass (confectionery) and core brands last year. "Chocolates n eeded to get retailed at larger and better outlets while all the products below Rs 3 needed a different distribution network," says Puri. Today Cadburys distri bution network reaches out to six lakh outlets each for its confectionery and ch ocolate brands. With the worm`s episode behind it, there are other issues botherin g the company, especially that of the rising input costs of cocoa, sugar and mil k. Although Cadbury has been able to maintain prices, it is still grappling with the upward trend in prices for its basic raw materials. But its challenge remai ns that of growing the chocolate market in spite of the odds. Posting a turnover of Rs 729 crore last year, Cadbury is waiting for Diwali to make a turnaround f or both itself and the category which has been through troubled times. 47

Pricing battle Cadburys efforts to exploit untapped potential and reach every pocket have a lo t to do with outwitting Nestle in the war of the wafers. Its latest annual report states: Cadbury is all set to satisfy untapped potenti al. With brand launches, re-launches and new products, the thrust is on reaching every individual, satisfying different palates and being within varying budgets . Basing its operations on this vision, Cadbury is charting a new course of acti on. With the product, place, price and promotion synergies working in tandem, it wont be long before we find a Cadbury in every pocket. This may sound like a reiteration of its earlier claims, but in its heart of hea rts, Cadbury India, in spite of being the leader in the chocolate market, is sti ll trying to settle scores with Nestle in the wafer-coated chocolate market, whe re it has yet to grab a dominant share. 48

Creating new launches and extensions may be an ongoing exercise for the Rs 511-c rore chocolate multinational, but lately it has set its sights on the Swiss food giant, Nestle, which is going through a rough patch with its flagship brand, Ki t Kat. In fact, the wafer chocolate war started in 1995 when both Perk (from Cadbury) a nd Kit Kat (from Nestle) were launched. It had Cadbury running for cover to prot ect its largest brand, Cadburys Dairy Milk, which it did by extending its posit ioning on the adult platform. The power-packed campaign from HTA (Have a Break ) did wonders for the Kit Kat brand at that point of time, but its premium prici ng proved to be the main hitch, which has seen its volumes dipping from 15 per c ent in 1997 to 9.5 per cent this June, as per ORG-Marg figures. Despite its share of the volumes coming down, Kit Kat still has a dominant share in the market while Cadburys Perk has seen steady shares between 2000 and 2006 with present volume shares at 8.8 per cent, as per ORG-Marg figures. Perk has a lso stretched itself to variants such as Mango, Strawberry and Mint to generate some excitement around the brand. So, while Kit Kat has taken a battering with its premium pricing and image, Cadb ury India is taking this chance to put its might behind its wafer category, with Perk and the newly-launched Milk Treat, to beat Nestle in this category. But then, the price points in the wafer chocolate category were redefined by Nes tle when it launched Munch at Rs 5 last year. Cadbury had to react to this lower ing of price within the wafer chocolates category and had to stretch Perk-to-Per k Slims at Rs 5 to counter it. 49

Explains Rajat Sabharwal, an analyst with Kotak Securities, the growth rates h ave come to a standstill in wafer chocolates and the market is not buoyant in th is category. With Nestle coming out with a lesser-priced brand, Cadbury is respo nding now. So, despite Nestl`s flagship brand suffering to a certain extent, a fl anking brand such as Munch has taken care of the dipping shares. Highlights Nirav Sheth, an analyst with SSKI Securities, In the first three ye ars since the launch of Kit Kat, its price rise has been too fast and this has b ackfired. Today, its price cuts have been prompted by competitive pressures and the purpose is obviously to gather volumes. But then, the prices of cocoa have also been crashing, perhaps helping Nestle absorb the price cuts, which, possib ly it would not have been in a position to do otherwise. Today, Nestle seems content with its strategy and admits that though shares of K it Kat have dipped, Munch has succeeded in doing what it was expected to do. Say s Sanjay Sehgal, Executive Vice-President (Marketing), Nestle India, Cadbury h as reacted to us. In fact, Munch could also be responsible for eating into the s hares of Kit Kat along with Cadburys own brand. There has been a redefinition o f pricing strategy for KitKat and we are hoping it will show. KitKat continues to sell at a slight premium to Perk though it is now offering a price discount of nearly 20 per cent, which indicates that Nestle either had gr eat margins on the brand earlier, or is in trouble. 50

For Cadbury, Perk is basically a fighter brand being used to flank the mother br and. In fact, the fight is almost similar to what HLL did with Wheel (though it was not making money on the brand) to counter Nirma in the detergent market whil e Surf sat pretty as the mother brand in Levers portfolio. However, in the case of wafer chocolates, it is not a very happening category si nce consumers have realized that they are not paying for pure chocolate, but for a chocolatecoated biscuit. For Cadbury, its cash cow will always remain its Cad burys Dairy Milk. Both are players fighting with their higher reserves, trying to establish themselves with a dominant share in the wafer chocolate category. The new Perk has four wafer layers covered with chocolate and is lighter and cri sper. Its packaging has also undergone a change and has used Cadburys trademark purple background with the dark brown wave of chocolate on the wrapper, indicat ing the presence of pure dairy milk chocolate, to set it apart from a common bis cuit chocolate. Cadbury is targeting a 12 per cent volume share for the Perk brand after this re launch and expects to overhaul Kit Kat. As Bharat Puri, Director (Sales & Market ing), Cadbury India, declares: our objective is to be the largest wafer-coated brand in the country. A new campaign has been developed for the relaunch of the brand where through th ree commercials the differences in the new Perk are highlighted through dialogue s alluding to match fixing -- Khule Aam Khayiye. Kabhi Bhi. Kahin Bhi. Explains Piyush Pandey, National Creative Director, Ogilvy & Mather, Through t he commercials we are trying to bring out various explanations about the changes in Perk. 51

The original campaign of Thodi Si Pet Pooja, Kabhi Bhi, Kahin Bhi will continue through another new commercial, of a lady secretly eating Perk on the occasion o f Karwa Chauth. Meanwhile, another wafer chocolate brand that has been targeting kids is Milk Tr eat, four wafers with butterscotch-flavored cream embedded in milky white chocol ate. Though Cadbury did have a white bar, Creamy Bar, it was never treated as a major brand. Milk Treat is pitted against Nestl`s Milky Bar though it is in a mould ed form unlike the former, which is in count form. There are expected to be more variants under the Milk Treat brand for children. Both Milk Treat and Perk are priced on par at Rs 10 for 27 gm. Despite all the action in the chocolate wafer segment, growth for Cadbury has al ways come from its mother brand - the Rs 117-crore Cadburys Dairy Milk which to day straddles all possible price points. Explains an analyst with Motilal Oswal Securities, For Cadbury, its growth has been coming from Cadburys Dairy Milk and what it is doing to Perk is just to g ather momentum in the chocolate market which thrives on innovation and excitemen t. In 2007, Cadbury recorded an eight per cent turnover growth in chocolate confect ionery led by its flagship brand Cadburys Dairy Milk, which registered a growth of over 40 per cent. The malted food drinks category reported a growth of 14 pe r cent while the sugar confectionery segment rose a mere three per cent. The clai rs brand grew by a healthy 14 per cent. 52

In fact, Cadbury has consciously stayed away from meddling too much with its her itage chocolate brands -- Dairy Milk and 5 Star. Explains Puri, As a marketer, it is best not to do too much to these heritage brands which already have stron g equity. Not that we will never relaunch them but right now they enjoy a strong equity. But, it did relaunch its heritage brand of malted drinks, Bournvita, last year w hen it lost share to the white drinks segment. There are plans to extend this st rong brand in the future, about which Cadbury does not want to reveal its plans right now. Interestingly, there already exists a similar sounding dark chocolate brand for adults, Bourneville, in its kitty for many years, which has not seen much advertising. While its chocolate brands are continuing to get broad based, its sugar confecti onery brands will get upgraded to higher price points. For instance, its hard-bo iled sweets such as Googly, Mocka and English Toffee are gradually being phased out, while the new brands such as Frutus, a chewy sweet (Re 1) and the jelly, Go llups (Rs 2), are expected to see some healthy growth. Adds Puri, It is not po ssible to build brands at such low price points. While there are volumes, the ma rgins are thin in this category. Besides, the latest Budget has hiked the duties of sugar confectionery products from eight per cent to 16 per cent, which in any case has led to an increase in prices and thereby affected brands such as Googly. But one thing that Cadbury has realized through all this is that it has got chea per with more products in the Rs 3-5 category. Its premium brands such as Cadbur y Gold, Truffle and even Picnic have never really been accepted in the chocolate market. Today, Cadbury 53

is constantly looking at pushing volumes at the lower end of the market and bran ds such as Relish, Break, 5 Star and Dairy Milk have Rs 5 variants catering to t his lowest price point. Perk Slims is the latest Rs 5 brand to be added to this list. As for taking the chocolate wafer war to the enemy camp, it might take a while b ecause Nestle also has deep pockets and has established itself in the chocolate wafer category in spite of dipping shares. However, Cadbury will always be the l eader with its heritage brands. As Rajat Sabharwal, an analyst with Kotak Securi ties states, Nestle may be a key player in the Indian chocolate market but the re is no possibility of it emerging as a category leader. 54

Cadbury faces prosecution Bureaus in Mumbai Laboratory tests by the Maharashtra Food and Drug Administrati on of samples of Cadburys products confirmed the presence of two dead and one l ive organisms. The unspecified product was manufactured by Cadburys factory nea r Pune. Cadbury India is now liable to be booked under the provisions of the food adulte ration law. Confirming this, FDA Commissioner Uttam Khobargade told Business Sta ndard: "As per FDA norms this is a clear case of adulteration. We will charge th e manufacturer. We have not found any instance of this adulteration in the Thane unit of Cadbury India." Khobargade added that while the company had offered the plea that faulty storage by a dealer was responsible for the incident, it was the manufacturers respons ibility to ensure that quality storage conditions were available with the dealer s. In a late night media release, Cadbury said: "We are not aware which samples hav e been tested by the Food and Drugs Administration. Neither have we received any official report from their office. We would therefore not like to comment until we have had a chance to see the formal report. However, we have checked the rel evant factory control samples and have found them to be of good quality and free of any traces of infestation." On October 3, acting on a consumer complaint, the Maharashtra FDA seized stocks of Dairy Milk chocolates in Maharashtra. A consumer found worms in a Dairy Milk chocolate bar, bought from a shop in Mumbais western suburb of Andheri. 55

Cadbury Dairy Milk, the flagship brand, contributed 30 per cent to the companys Rs 687.30 crore (Rs 6.87 billion) turnover in 2002. More infested Cadbury chocolates found Ten Cadbury chocolate bars were on Monday sent to the Maharashtra Food and Drug Administration laboratory in Dadar, Mumbai, for testing whether they contained w orms. The move came three days after the state government expressed satisfaction at th e hygienic condition being maintained at the manufacturing unit of Cadbury. FDA sources said the chocolates, from a shop in Kurla, central Mumbai, were hand ed over to police, who in turn deposited them with the FDA at around 1530 IST. The chocolates were found to have holes in them, they said. On October 10, Minis ter of State for Food and Drug Administration Anil Deshmukh had said that the ju diciary would decide whether to prohibit the sale of the seized stock. Meanwhile, FDA Commissioner Uttam Khobragade alleged that Cadbury officials were trying to put political pressure on him. But "I will not come under any political pressure", he said. Khobragade said, "Instead of admitting their fault, Cadbury are saying that its dealers fault. Why are they forgetting that those are their dealer so its the ir responsibility to make the product safe?" 56

He also said he would not visit the Cadbury factory. "I have no business to visi t their factory. What I want is that the products coming into the market should be perfect." Asked if it was lobbying the government, a Cadbury official told rediff.com: "We reiterate that we will continue to cooperate with the authorities." She said the company was confident that "our products are of the highest standar ds". Asked why Cadbury had not followed the FDA commissioners suggestion to withdraw its products from the market and repack them, she said, "As a part of our stand ard procedure we regularly take back any damaged or date expired stocks back fro m our retailers." She said the company had not received any intimation about a case being register ed against it. "However, we will continue to extend all cooperation to the autho rities because like the FDA, Cadbury is also conscious of its commitment to soci ety in general and consumers in particular." Regarding Deshmukhs visit to the Cadbury plant, she said the minister "inspecte d the hygiene standards and manufacturing practices adhered to" by the company. She admitted the controversy would affect the sales during the festival season. "However, we would like to reiterate that all through the 55 years of leadership in India, Cadbury has remained synonymous with chocolates and we have remained committed to high quality and consumer satisfaction. 57

Cadburys loss is Amuls gain As Cadbury India finds itself mired in the worm`s controversy, Gujarat Co-operativ e Milk Marketing Federation, which makes Amul chocolates, has witnessed a surge in sales. After selling 60 tonnes of chocolate in September, the company was on course to report sales of 150 tonnes in October and had projected sales of 250 tonnes in N ovember, a GCMMF executive told Business Standard. In Mumbai, which accounts for almost 10 per cent of the 4,000 tonne, Rs 650 cror e (Rs 6.50 billion) a year chocolate market in India, the company plans to raise its market share from 2 per cent in the beginning of October to 15 per cent by the end of the month. "We will sell 20 tonnes this month in Mumbai, against only 2 tonnes in October l ast year," the GCMMF executive said. According to the executive, while 20 per cent of the growth in Amuls sales in r ecent days has been because of the Cadbury factor, the recent brand launches by the company and the increased focus of GCMMF on chocolates have contributed 40 p er cent each to the rise in the numbers. In an attempt to boost sales, the company has launched three new chocolates in M umbai under the brands Fundoo, Bindaas and Almond Bar. While the first two have been priced at Rs 10 for a 30 gm stick, Almond Bar carries a price tag of Rs 10 for a 35 gm chocolate. 58

As a result, the companys festival season pack "Rejoice" now comes with six cho colates in the city, up from three during the festive season last year. "A national launch of the three brands is likely to happen in a months time," t he official added. Encouraged by the rising numbers, GCMMF has drawn up plans to make its chocolate business a separate division of the company. "We think that the business requires a special focus and this is the best way to do it," the official added. Cadbury India is the largest player in the Indian c hocolate market, followed by Nestle India and Amul. Cadbury bids to worm way into public good books with Big B endorsement The Big B is going to promote the Big C in the chocolate business - Cadbury in I ndia. Indian cine superstar Amitabh Bachchan has signed on to become the brand a mbassador of the chocolate major for two years. AB will play a pivotal role in all communication relating to Cadburys products and brands, be it in print, on television or the great outdoors, the companys m anaging director Bharat Puri has been quoted as saying in media reports Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the comp anys new brand ambassador. 59

He will endorse and promote Cadbury chocolates for a period of two years. As bra nd ambassador, he will play a key role in brand and product communication on tel evision, in print and outdoor media. Cadbury has launched a strengthened, new purity sealed packaging for Cadbury D airy Milk. The new packaging for 13g (Rs 5) is double wrapped for maximum protec tion. The chocolate is wrapped in aluminum foil and enclosed in a poly flow pack , which is completely sealed on all sides. In the second phase, the larger Cadbu ry Dairy Milk packs will come in poly-coated aluminium foil, which will be heatsealed and then wrapped in the branded outer package. Both these steps are a fi rst ever in chocolate packaging in India. Amitabh Bachchan is Cadbury brand amb assador. Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the comp anys new brand ambassador. He will endorse and promote Cadbury chocolates for a period of two years. As bra nd ambassador "Over the last few months, we have had some cases of infestation due to improper storage conditions. As a company committed to ensuring that our consumers enjoy a pristine bar of chocolate each time, we decided to take steps to reduce depen dency on storage conditions to the extent possible," said Bharat Puri, managing director, Cadbury India Ltd. "Cadbury will do everything it can to ensure that e very bar of chocolate that a consumer buys comes full of goodness and rich taste ." 60

Commenting on Amitabh Bachchan as brand ambassador for Cadbury chocolates, Puri said, "There is a perfect fit between Amitabh Bachchan and Cadbury chocolates their timelessness, and the love and trust they both share with the people acros s India, makes this an ideal partnership. Moreover, Mr Bachchan has a universal appeal that extends to everyone from 6 to 60, just as our chocolates do. We believe his endorsement of Cadbury Dairy Milk will go a long way towards our objective of increasing chocolate consumption amo ng all ages of consumers." Amitabh Bachchan said, "Most of you may not know this, but I have been a brand a mbassador for Cadbury for the last 55 years. Only, now it is official. Bringing smiles, spreading happiness and joy amongst millions of people in India is what Cadbury and I shall be continuously working towards." The new 13g (Rs 5) Cadbury Dairy Milk packaging is currently available only in M aharashtra and the national rollout will take place over the next three weeks. N ew packaging for the larger bars of Cadbury Dairy Milk, Fruit & Nut, Crackle, Bo urnville, Caramello, and Double Deck will be completed in six weeks. 61

CADBURY'S PRICING Organizational structure of Cadbury Hierarchical structure is based on distinct chain of commands from Managing dire ctor to Clerical Support assistants (according to Cadbury). Decisions are made a t the top and pass down. Such organizational are usually based on clearly define d procedures and roles.

Cadbury organization is based on more democratic. Decisions are made as a result of a consultation process involving various members of the organization (Cadbur y). Ideas would be discussed and thought through collectively. Within Cadbury or ganization we can find a Democratic structure, Because Cadbury tends to be found in situation were it is felt to be important for all members of the organizatio n to understand what they are doing, were decisions require individual initiativ e, and where member of staff need to work as a team. How management style, Culture and Organizational structure interrelate Managemen t style, culture and organizational structure interrelate together in Cadbury be cause they all work together to help the business to achieve its objectives; in order to lead a successful business. 62

Cadbury has strategies for the organization, continually to motivate members of staff to support this process, and market change within the organization.

Management style, culture and organizational structure interrelate together in C adbury because they all work together to: UNDERSTANDING COSTS AND PRICING FOR SUCCESS We have many ways of pricing our pro ducts or services. The first thing to understand is the cost elements that make up our offering. This unbundling of cost must be known prior to setting prices, however it may have only limited influence in the price finally set. You may del iberately price an element at a loss, and another at a huge profit because the m arket with bear this. The loss leading offering maybe the carrot required to dif ferentiate you from your competition, make your offering seem fresh and market l eading, and your competitions offering, old hat. But if you haven`t done your fore casts and understood your cost models properly before going to market, then the end result of your sales success could be a huge loss. And in pricing, you need to look clearly at your business goals. Do you want to: - Sell your products or services? - Dominate the market? - Force the market to purchase your product? - Have fun? You may try different strategies at different times depending on what result you are after. If you a new to a market, then yo u may employ an early adopter strategy to achieve 63

some presence and reference. Later in the lifecycle, you may use a strategy that achieves greater returns in a more traditional manner. With our LINC product in 1980, we identified we had only four potential clients IBM, Burroughs, NCR, and Digital. So we had to prepare strategies, which would a chieve the business goals we wanted to establish our company as a developer of g ood development and deployment environments, and to earn and excellent stream of profitable revenue for several years. We sold LINC to Burroughs for US$1 plus t he rights to continue manufacturing new feature content for on a predefined cost ed basis and to provide product support. Thus profitability was guaranteed so lo ng as product quality levels were maintained. So knowing your costs is important if you wish to position your prices for profitability. But knowing your costs is not enough. You also need to know all about yourselves as a company and position your business. You need to: - Know what exactly is yo ur business solution? - Who exactly are your potential clients? - What is your u nique customer advantage? - What is your business identity? - What is your eleva tor statement? Without this business knowledge, you do not have a hope of pricing your product to meet your business goals and to effectively compete in the market place. 64

In my days in the fishing industry, selling Orange Roughy frozen fish fillets, w e were one of several players in a market place for a variety of fish that was n ot a household name but was distinctive. We needed to differentiate ourselves as the product to be sought after ahead of other fish brands, and competitor produ cts. Our objective was to be the fish fillet provider of choice in the Great Lak es region of the United States of America. We launched our Fletcher Quality Oran ge Roughy brand at a 10% premium price over our competitors. We launched as the top quality product, a USA hygienic clean white fish meat (some would say tastele ss ), in a special display pack. And in a market where everyone delivers late, del ivery on time. So our differentiators were top quality, special display pack and delivery on time. Orange Roughy was a distinctive name. People were amazed that such a good-looking fish fillet could have such a horrid name, yet if we could get them to try the fish, they would love it and would tell all their neighbours and friends. The name Orange Roughy was a memorable name and by making the fish l ook in a class of its own in the shop window display pack, we captured a strong market. Within a year, Fletcher brand Orange Roughy was commanding a 30% margin and was selling ahead of any other brands. So knowing your business, your unique customer advantage, who you are, and what you are pitching is vital to your success. 65

WHAT IS ALSO IMPORTANT IS THE DETAIL OF HOW YOU APPLY YOUR PRICING In software, the key pricing ingredients we can unbundled are: - Product licence - Support - Training - Documentation - Consultancy And we are not the only industry that unbundled our investment. The best known u nbundled today is the motor vehicle industry where a simple $7995 on the windscr een represents $10,000 plus when you add registration, bullbars, CDStacker, leat her trim, electric aerial, insurance, 3 year warranty etc. In our software industry the best unbundlers I have come across are Oracle. I ha ve never really met anyone who could understand easily what the Oracle purchase components would add up to for a particular configuration. Just as well Oracle A SAP arrived as a fixed price deal to reduce the confusion. But back to the components, each of these ingredients has its own equation, whic h sends a message to a prospective purchaser: 66

PRODUCT LICENCE could be purchase, lease, and rental, bundled with another eleme nt. You will all no doubt remember when OS2 was it and Windows was the small pla yer with a lower level of capability. Microsoft`s master stroke was to almost give their Office suite of products away to Windows users to get them to use their W indows operating system and ensure that it became the international leader. SUPP ORT in some cases, the cost of a product in insignificant beside the level of su pport cost, which shows the ability to have an ongoing relationship with a suppl ier when using a product. In a development, a high level of support content may denote a low quality initial development. TRAINING in the case of a development environment such as Jade, VB or C++, people need to be trained to make effective use of your product. It is the concept of a fool with a tool still being a fool u nless he/she has effective training in the skills to use the tool. The first int roduction course is always justifiable by a company so you can price this well. What businesses struggle with is justifying an Advanced Course . They feel that if they are training a developer in a new product, then the developer should be abl e to pick the balance of the product up by themselves. People such as Microsoft and Cisco have got around this by putting together an Academy programmed includi ng a tiered hierarchy of courses clearly differentiated in content and adding to become a package of knowledge. A clever move. DOCUMENTATION nobody reads it but without it, no prospective purchaser will purchase your product. So what is it worth to a purchaser? Certainly not what it costs. And if you priced it based up on hours of use by a purchaser, it would be a highly variable commodity. Most tr eat it as a nominal cost and unbundled it, or pay third party providers 67

to build documentation for them. One of the better books I have seen recently is the Python Cookbook, which is a very easy how to for their development environmen t and published by a third party. CONSULTANCY you don`t need it, but if you have i t you may make progress much quicker than you would without it. So consultancy s hould be priced to cover costs and allow a margin. If you do not charge enough, it is likely not to be valued by the client enough. OTHER ISSUES WITH PRICING THE INTERNATIONAL PRICE In Jade, we decided to get too clever. We believed the market could bear a higher price in some countries than in others. So we established NZ, Australian, UK and US pricing. Now, how do you put all this on the website and appear international and professional? The answ er is that you can`t. So we didn`t publish a price at all. We have had thousands of queries for the price of Jade, but we have no idea how many thousands of hits ha ve just turned away, believing the price was outside their price range. This is not the case for all products let`s look at the Bentley luxury car. The Bentley Mo tors website does not list prices. But it is a superb site and if you are lookin g for the extravagance of a Bentley, then price is not an issue. The site looks like you pay a fortune and it would be crass to publish a price if you have to as k, then you are unlikely to be a likely purchaser . Jade have learned their lesson and from June 15 this year, Jade comes out at an international price where a de velopment licence is at no charge and different, clearly defined levels of suppo rt can be obtained. From June 15, the international price for a Jade development licence is zero dollars. 68

OTHER ISSUES WITH PRICING DISTRIBUTOR MARGINS Many product and service sellers l eave insufficient money in the pot for the distributor to do what they have to d o to be effective. If they don`t have enough margin for market spend, sales activi ty, and support, then they will not be effective. Too many pricing strategies do not consider the way the product is going to be distributed internationally and what the financial position will be of those distributors and resellers doing t hat task. They are an extension of your sales force so they need to be considere d as being a part of your company with appropriate cost structures. OTHER PRICING OPTIONS PARTNERING For Independent Solutions Vendors developing th eir own applications, Jade offers clients the option of no end user charges but instead the option of a royalty on revenue earned from the sale of the applicati on to an end client? MESSY - Another option is a charge for a server product but no charge for client use? This means that changing the configuration will resul t in changes to end user charges. FIXED - A fixed monthly rental for use of an a pplication? USAGE BASED - Sale of a library package for schools based upon the u sage calculated on a multiplier on the number of kids in the school? FIXED FEE P LUS - A support fee for services with a cap over which a premium is paid? SUCCES S BASED - A dollar for every successful car rental processed through an applicat ion? Truly sharing in the success of the company 69

SERVICE LEVEL OPTIONS Platinum, Gold, Silver, Bronze, pay as you go. It is proba bly better to sell a service contract up front than to hit clients credit cards with charges when they are having a tough time with bugs in your product. Making a change to your price /market position Sometimes the strategies to go from whe re you are now to where you want to be are very simple. We suggested to the clie nt in Case 1 the successful one that he add a zero on the right hand end of his price, rename the product to sound grand, and take it out to market as the enter prise release. He told us it would never work. We struck a deal and he now has a new product, selling extremely well, providing him with good margin which has e nabled him to set up a team of international distributors. He is starting his sl ide to retirement by travelling around the world assisting his distributors to i nstall the application and getting some holidays in nice places on the side. He is 50 years old. He describes it as a holiday with business, rather than a busin ess holiday. The second case. With the company who has built a product to help students learn English more quickly and better has changed their market, target distribution, and widened his market. They are now not selling their product to a limited numb er of NZ English language colleges. They are now promoting their product to stud ents using the English language colleges as their distributors. The deal they no w take out is a distribution offer to colleges to make money selling their produ ct. And not just through NZ colleges but as an international offering. They have had 70

to readjust their expectations on price to allow for single student use, change their security structure to give the required control, and have had to forgo som e of their distribution margin. But they have more multipliers in place, more fe et on the ground, and their product is being offered to millions of people in mo re countries than they had ever hoped to holiday in. The jury is out on the char ges but the opportunity looks solid and the distribution network is enthusiastic . The third case was the developer who was barely covering costs. He proposed the development of a new application for an existing client where he budgeted to mak e a 40% profit. He planned the project properly, outlined the phases and costs f or each and the timeline for these, and, was accused by the client of holding th e client to ransom. He offered to take some phases out of the equation and asked which phases the client wished him to remove. The client did not know how to re spond to this. Acceptance testing was discussed as a possible option, but the ca veat on this was that support cost increases and likely application instability were then discussed. The developer had decided to forgo the client rather than t o do the job on any other basis than that he has proposed. Hard ball. The client finally agreed but then wanted the system installed earlier. The developer aske d the client which phases of the project he would agree could be done without. T he development finished on the original time, the client is happy and is now a r eference site, the application is delivering sound business results, and another two applications are under development on the same new basis. The client is lea rning to respect the value of 71

what is being delivered, and has a vastly better understanding of the elements w hich make up a successful application implementation. The fourth case is work in progress at present. This was the company that had set its price based on the rep ort from a Big 5 consultant. Nothing wrong with the report or its accuracy. But lots wrong with the brief proposed to the consultants as regards the business go als and market positioning the pricing strategy was to assist with. As I mention ed earlier, the pricing strategy for Jade has changed dramatically. Large number s of pre-alerted international clients were set to download Jade from the Jade w ebsite from15 June. Price is only one of the factors that are changing to take J ade from being an internationally boutique product into the realm of being a per vasive and widely used development and deployment environment. Yes, some of the costs are being unbundled but access to the development environment will be free . I look forward to reporting on the success of this strategy in a year or so. P ricing is an art where if you are challenged with Is your price right? , you can tr uthfully respond It depends . Pricing is an important key to your business success, but not the only key. Cadbury is going to need all the help it can get in the c oming years. Last year the company initiated its major foray into one of the tou ghest consumer markets in this country: the Rs 1,600-crore sugar confectionery i ndustry. Sugar confectionery contributed 13% to its 1998 turnover, of which 9% c ame in from the leading brand in the clair market, Cadburys clair. So far the con fectionery foray has been watchful and conservative. All of that is set to chang e this year. A spanking new plant in Pune 72

(Maharashtra) was set up at a cost of Rs 8 crore to bring in some of its interna tional confectionery brands. In December 1999, the company introduced two new pr oducts in the confectionery segment, a chewy sweet called Frutus (Rs 1) and a je lly called Googly (Rs 2). Says Puri: "Our focus is going to be on launching valu e-added products during the year." A value-added product is not merely a nice ma rketing term to bandy about. In this industry it is often a case of survival. Si nce most of the industry functions around the 50paise price point (Rs 1 is premi um pricing), margins are painfully low. But there are other attributes that go i nto making it a complicated market. It functions on a you-eye-it-you-buy-it syndrome which means that retail penet ration is very important. Most purchases, such as chocolate, are impulse-driven so retail displays and dispensers are very important. Brand loyalty is non-exist ent, the market is notoriously price-sensitive and different products among conf ectionery -- hard-boiled sweets, ice creams and bubble gums -- often compete wit h each other. Since it caters to the most fickle of consumer categories -- child ren -- the category needs a constant frisson of excitement to keep interest aliv e. Last but not least is the fact that about 25-30% of the Rs 1,600-crore market is catered to by the unorganized sector. Couple this with the fact that it has strong competition in this market through Parrys Confectionery, Ravalgaon Sugar Farm and multinationals like Perfetti, and its easy to see that Cadbury has go t its work cut out. What perhaps makes things worse is that the latest budget ha s hiked excise duties of sugar confectionery products from 8% to 16% and this ma y result in an upward movement of prices, which in turn may affect volumes adver sely. For Bakshi, its been a momentous two years at the helm of Cadburys affai rs. He has all along felt that the best 73

way to drive up volumes in this business is to expand the consumer base. One way of doing it is to take the companys products down the price line. That exercis e is well underway. The other is to make chocolates appeal to a wider audience ( read adults). This is a tactic thats close to Bakshis heart and now that the c ompany is in fine trim, will perhaps be his next big challenge. Cocoa surplus he lps sustain chocolate prices PRICES of branded chocolates have displayed divergent trends over the past year. On one hand, there has been an increase in the maximum retail prices (MRPs) of the larger pack sizes of established brands. On the other hand, the MRP of the p opular pack sizes and brands appear to be heading southwards. For instance, between September 1999 and September 2000, the MRP of Cadburys Da iry Milk (80 g) was hiked from Rs 26 to Rs 30. Cadburys clairs and Cadburys Fru it and Nut also saw price increases. But, Cadburys Perk, Picnic and Nestl`s Kit Ka t have all seen their price lines revised downward. The past couple of years have seen the availability of a large number of importe d brands, and intensifying competition in the domestic chocolate market. Pricing strategies have largely responded to this situation. The two major domestic pla yers -- Cadbury India and Nestle India -- have adopted a major strategy to pep u p their flagging volume growth. They have focused on lower price points. In the recent times, both players have tried to expand the number of products av ailable in the popular price points of Rs 5 and Rs 10. 74

Over the past year, Cadbury India has introduced smaller pack weights of its Per k and Picnic range in order to reduce the MRPs of these brands to the Rs 5 and R s 10 range. Similarly, Nestle India has retaliated with the launch of Rs 10 versions of its brands, Munch and Charge. Meanwhile, declining prices of the key input for chocolate -- cocoa, have probab ly helped the players a great deal in sustaining this pricing strategy. A global cocoa surplus for the year, coupled with the forecast of high cocoa output for the 2006-2007 (October to September) season, has helped bring about a steady dec line in cocoa prices over the past one-and-a-half years. International prices have declined from around $1,200 per tonne in March last to levels of around $800 per tonne at present. Since both Cadbury and Nestle outsource a substantial portion of their cocoa req uirements, the decline in cocoa prices has probably given both players a larger leeway when it comes to reducing their price levels 75

CHAPTER 3 RESULT AND ANALYSIS 1. Taste of the same product often differ from country to co untry The composition of export lines is always as near as possible to that of the UK product. However, They have to comply with the food laws in the country in which the product is being sold. This does affect the end result where food laws diff er significantly from the UK. 2. Taste of the same product often differ from brand to brand. The way chocolate is stored can affect the taste. For instance chocolate stored in a warm environment will become stale more quickly than chocolate stored in a refrigerator. Although the recipe and ingredients for our chocolates are always controlled to tight recipe standards, on occasions ingredients are sourced from different area s, and milk particularly can taste differently when bought from different areas of the country. Chocolate recipes and textures are different. For instance a bar of Cadbury Dair y Milk tastes quite different to a Flake or a Wispa because they have different recipes. 3. Purpose of the Cadbury website. The Cadbury website provides a variety of information about the world of chocola te and Cadburys vital role in that ever popular market. It has attracted millio ns of visitors since its launch in March 1996. 76

Although the Cadbury site is a popular stop for Internet surfers, it was not des igned as a promotional tool for its brands but rather as an educational and info rmative source for interested surfers from educational establishments to chocola te-loving members of the public. 4 Cadbury makes low fat or diabetic chocolate bars DIABETIC CHOCOLATE Unfortunately they do not manufacture chocolates suitable for Diabetics under th e Cadbury label. Trebor Bassett confectionery however, which is an associate com pany of Cadbury Ltd sells Diabetic chocolate under the Ernest Jackson "Special R ecipe" label. There are a variety of flavours and products within the range, and these bars ar e generally available in larger chemists throughout the country. Chemists are al so able to order these bars from their suppliers given a little notice. LOW FAT CHOCOLATE They dont specialize currently in the manufacture of low fat bars. You may be i nterested to learn however that our Frys Turkish delight bars are 92% fat free! They also produce a range of treat size and snack size bars, which are smaller than their standard bars. Although they have no immediate plans to launch a low fat bar there is always a possibility that they may do so in the future. 77

5. sponsor other sites or take advertising on other sites In general it is not our policy to sponsor other sites or take advertising space . 6. Where do product names come from MILK TRAY The name "Tray" came from the special pack in which the milk chocolate assortmen t was delivered to the shops. Originally Milk Tray was packed in 5.5lb boxes and arranged on trays from which it was sold loose to customers. DOUBLE DECKER The Double Decker name was inspired by the British obsession with double Decker buses in the 1970s FLAKE 99 The real reason for "99" Flake being so called has been lost in the mists of tim e, but this is an extract from an article which appeared in a Cadbury works pape r many years ago. At a recent Sales conference Mr Berry, a sales manager, told a story of how Flak e became associated with ice cream and how "99" Flake came by its name. "When I first came north in 1928 I found that some of the Italian soft ice cream makers in County Durham were trying ways of introducing other lines to increase their sales, which 78

in those days were largely in the form of sandwich wafers. The possibilities wer e obvious if we could get a suitable line, both in shape and size and texture and the most promising was Flake, which at that time only sold as a 2d line, and therefore had to be cut with a knife to reduce its size. It proved very successf ul and its popularity quickly spread. After successive introductions of half pen ny and 1d Flake, both of which were sold with ice cream, the Sales Committee fin ally agreed to produce a special size to fit the sandwich and Mr Berry visited a number of Italian customers in the area. After this of course the cornet with t he Flake placed temptingly in the top of the ice cream became very popular. In the days of the monarchy in Italy the King has a specially chosen guard consi sting of 99 men, and subsequently anything really special or first class was kno wn as "99" - and that his how "99" Flake came by its name. 7. An idea for a new product Here at Cadbury they have a Research and Development Team who, in partnership wi th the Marketing Department continually investigate new product ideas. Development of a new chocolate product requires tremendous investment, both in t ime and financial resources. For every new product that reaches the market place, fifty or more will have fai led to meet expectations somewhere during development. New products have to be c arefully 79

researched to ensure they have mass appeal, and the decision to introduce a new Cadbury chocolate product is always based on the results of extensive market res earch. Unfortunately for these reasons they are not able to use any ideas from members of the public. PRODUCTS REFFERED BY PEPOLE CHART 3.01 Which product you prefer? Cadbury Nestle Amul Others 80

CHART 3.02 factor consider while purchasing a product price quality brand andorsement taste GRAPH 3.01 Which product of cadbury yuo like the most? 60 40 20 0 Dairy milk product Five star Nuties Series1 Percentage Byets Series1 81

Ratio analysis Financial statements can be analyzed by shareholders, the financial press, and o thers to check how well a company is performing. Ratios are determined from a co mpanys financial information and used for comparison purposes, e.g. operating p rofit to sales. This can be set out in the form: Operating Profit : Revenue Alternatively, it can be set out as a percentage. Operating Profit Margin=Operating profit x 100 Revenue This is very helpful beca use it shows how much profit is made for each 1 of sales made. An improvement in Operating Profit margin would see this figure rising over time showing that Cadb ury customers are prepared to pay more for their purchases and/or that the com pany has made savings by improving the way it makes or ships its products. The o perating profit margin of Cadbury Schweppes can be compared from year to year e. g. comparing 2006, 2007 etc, with 2008. Cadbury profit margin can also be comp ared with that of other companies. If you refer back to the Profit and Loss Account, you can see that the operating profit margin was: 143x100=14.27% 1002 82

The figure above is crucial to Cadbury as it relates to the second performance g oal. Here is another ratio you will find in your current course. This ratio shows whe ther the company owes more money to its suppliers and bankers than the assets it holds in the form of stocks, debtors and cash. If this number is less than 1, t hen the companys shortterm or liquid assets are greater then its short-term lia bilities. Current asset CURRENT RATIO = Current liability If you refer back to the Balance sheet, you can see that the current ratio for Cadbury is: 2040/2313=0.88 This ratio is used in different ways for small and large companies. Businessmen and women considering whether to trade with a new small company would prefer to see this figure at 1.5 or above - as an indication that the company is solvent a nd will be able to pay its debts. For large established companies with good cred it ratings, a lower ratio indicates an efficient use of capital. In addition to the Balance Sheet and Income Statement, Cadbury values the inform ation provided in its Cash Flow Statement. This statement simply sets out the in comings and outgoings of cash in a business during a particular period of time e .g. one year. It shows how the main categories of cash flow have changed the cas h balance in particular periods. 83

In 2007, Cadbury achieved free cash flow generation of 265 million. Cash flow is very important to the company because cash enables the business to pay its bills , pay dividends to its shareholders and, in addition, to make acquisitions. In recent times Cadbury has focused on acquiring new businesses, increasing sale s and innovation, cutting costs, and integrating existing businesses to achieve its aims of: Higher sales growth

Improved operating profit margins

Higher levels of free cash flow. Through efficient financial management Cadbury is able to continually invest in making sure that customers are supplied with the brands that they enjoy. 84

Conclusion Cadbury prepares financial statements because: As a listed company, it is legally required to do so.

Cadbury wants to communicate a true and fair picture of the financial state of t he company to its shareowners and external analysts.

The company values transparency and honesty and aims to reflect this is all its communications, both internally and externally. Cadbury won the Communication of Corporate Strategy Award at the PricewaterhouseCoopers Building Public Trust awards in 2005. This publicly rec ognized the high standards of the companys reporting: a highly accessible over view of its short-term strategy, major markets and measurable targets. 85

CHAPTER 4 RECOMMANDATIONS

There should be difference in pricing strategy of Cadbury i.e. in term of rural and urban areas.

It should show more and more ad of the chocolates that it is offering. For Examp le, Cadbury only emphasis on Dairy milk chocolate the most and not the other pro ducts.

It should introduce different schemes like giving mask to the children with thei r product to attract children the most.

The packaging of the Cadbury product should be made more attractive so that more and more people gets attracted towards it. Every customer likes changes if not they get used to it but they should take risk. 86

CHAPTER 5 LIMITATIONS

This study provides the data for only Cadbury pricing. The following study does not represent overall idea of any company. Two months time is not sufficient for study of the topic. The data collected is from secondary source hence it is not 100% accurate. There can be a chance of biasness in the data selection. 87

CONCLUSION

Price plays an important role in the purchase of a product like dairy milk they have introduced dairy milk the most popular chocolate in Rs.5 also which is with in the reach of every customer.

Consumer prefers quality goods at lower price like Cadbury people just introduce d bytes, which is a snack, which is sweet.

Consumer is loyal to brand so it`s necessary to pay attention to the brand image. In today`s world most of the people see the image of the product and then purchase it. So it`s necessary to make an image in market.

Consumer prefers those goods whose advertisements are shown on television. Price should be according to the competitor`s price .i.e the price of Cadbury should be less or same as the competitors price. . 88

BIBLIOGRAPHY www.cadburyindia.com, 7th June 2009 , 6.15 PM www.findarticles.com , 29th June 2009 , 9.10 PM www.cadbury.co.uk , 18th July 2009 . 4.30 PM www.economictimes .com , 30th July 2009 , 3.35 PM www.wikipedia.org , 10th August 2009 , 8.10 PM ust, 5.45 PM 89 www.indiatodaygroup.com ,11th Aug

90