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Cadbury India: Product Life Cycle Management

CASE STUDY, MARKETING MANAGEMENT
ET Cases, 18 pages
AUTHOR(S) : Syed Abdul Samad and Dr. Nagendra V Chowdary

Case Preview

Cadbury India: Product Life Cycle Management

 

“We have stayed ahead of competition by growing the category. This category growth has come through behaviour-changing advertising, innovation and growing width and depth of distribution.”

-- Mondelez India Foods Limited

 

Since 2012, Cadbury India (Cadbury) had been trying to extend its market into rural markets. Cadbury, which made its entry into the Indian market in July 1948, had been reinventing over the last seven decades by making itself relevant through the expansion of its distribution network with innovative product lines like – Perk, Shots, Silk, etc. It had also been trying to reach out to varied groups of customers through its innovative advertising and repositioning its existing product lines. The Indian consumer is fond of sweets and consumed them as a dessert after meals and also to celebrate success and occasions like festivals, weddings, etc. Cadbury tried to reposition its products as a gift item and as a sweet for celebrations. It also switched the perceptions of the consumers that chocolates were just for the kids and repositioned its products not only for teenagers but for all the age groups.

AIDed (Advertising, Innovation and Distribution) by its multi-pronged approach of changing consumption behavior of Indians in general and rural Indians in particular, would it be able to stay ahead of the pack? Would its AID formula succeed in increasing the chocolate consumption levels of the Indian consumers and the market size, and in turn keep rechristening its PLC? Would it be able to extend its Product Life Cycle (PLC) and stay relevant in terms of its product value chain in the Indian chocolate market?...................

Chocolate Market in India

India was among the fastest growing markets in the world in terms of chocolate consumption. Growing at a Compounded Annual Growth Rate (CAGR) of 25%, India’s confectionery market was worth about 5,000 crore in October 2013 and was expected to cross 7,500 crore by 2015.1 Nearly, 70% of revenues are contributed by sugar confectionery and the remaining 30%2 are accounted for by the chocolate confectionery market, which is worth 2000 crore3 (organized market). However, the per capita consumption among Indians is very low at 75gm-100gm per year, while the British and French consume 6 kg per capita per year.The confectionery industry is broadly divided into – chocolate confectionery, sugar confectionery and gums. In India, this industry is divided into – chocolates (5 Star, Eclairs, Munch), hard-boiled sugar candies (Mango Bite, Mint-O, Mentos), lollipops (Nutrine Lollipop, Alpenliebe), lozenges (Poppins), and gums (Big Babol, Boomer). 

The chocolate market in India was witnessing a change in consumption patterns due to the growing middle class, their increased affordability and availability of a broader range of brands (Exhibit I). Chocolates were increasingly being bought by Indians for everyday consumption as a snack rather than occasional luxuries and even replacing traditional sweets, snacks and savouries with chocolates for in-home consumption and gifting during celebratory occasions.

Exhibits

Exhibit I: Chocolate Consumption Pattern in India

Exhibit II: Chocolate Demand in Rural India

Exhibit III: An 1885 Advertisement for Cadbury’s Cocoa

Exhibit IV: Cadbury India: Segment-wise Market Share

Exhibit V: Cadbury’s Innovations

Exhibit VI: Cadbury's Kashmir Ad

Exhibit VII: Gems' Taglines Over The Years

Exhibit VIII: FMCG India - Sales Channel Breakdown

Exhibit IX: Cadbury Distribution Structure

Exhibit X: Changing Dynamics of Rural Consumption in India

Exhibit XI: Cadbury India Sales Growth (%)

Annexures

Annexure I: Major Brand’s Market Shares in India

Annexure II: Mondelez International, Inc. Selected Financial Data

Annexure III: Cadbury India – Financial Highlights

Annexure IV: Cadbury India’s Notable Product Introductions

Annexure V : Cadbury Ads in India


1 “Chocolate demand soars by 40% amid growing concerns of adulterated sweets & abnormally high dry-fruit prices this festive season: Survey”, http://www.assocham.org/prels/shownews-archive.php?id=4216, October 18th 2013


2 Nargis Namazi, “A Sweet look into the world of Indian Confectionery”, http://www.businessreviewindia.in/lifestyle/travel-food/asweet-look-into-the-world-of-indian-confectionery, July 27th 2011

3 Writankar Mukherjee and Ratna Bhushan, “India is the fastest growing market for adult consumption of chocolates and candies”, http://articles.economictimes.indiatimes.com/2013-08-01/news/40963259_1_chocolate-consumption-chocolate-market-indian-consumers,August 1st 2013


4 “India emerges as fastest growing market for chocolate”, http://www.timeslive.co.za/lifestyle/2012/11/09/india-emerges-as-fastestgrowing-market-for-chocolate, November 9th 2012

Teaching Note Preview

Cadbury India: Product Life Cycle Management

 

Synopsis

This case study enables a discussion on how AID (Advertising, Innovation and Distribution) can be used to extend the Product Life Cycle (PLC) as Cadbury India demonstrated over seven decades of continuing performance. This also highlights very subtly Cadbury India’s competitive strategies to stay ahead of the pack in the Indian chocolate market. Cadbury, which was operating in Indian since 1948, was reinventing itself with its innovative products, emotionally charged advertisements and the expansion of its distribution network in the country. With these, the company was extending its product life cycle by reaching a new set of consumers with new customer value propositions.

For instance, over the years Cadbury had been able to change the perceptions of the consumers that chocolates were just for the kids. Through its advertisements it repositioned its products for teenagers, then for adults and now as a product that is meant for people of all the age groups. It also repositioned its products as a gift item and as a sweet for celebrations, where Indian consumer consumed traditional sweets during festivities and other occasions. With around 70% of market share but very low consumption levels in India, can Cadbury increase the Indian per capita chocolate consumption levels and market size? Would it be able to maintain its market share and stay ahead of the pack? Would it be able to extend its PLC with its rural distribution?

Prerequisite Conceptual Understanding (PCU)/ Before the Classroom Discussion

A working knowledge along with the business implications of the following concepts would enable an effective discussion leading to more practical solutions than a mere intellectual exercise. The participants were asked to read the following concepts from 14th edition of Marketing Management textbook to help them better connect the concepts:

1. Philip Kotler, et al., “Chapter 8: Competitive Dynamics”, Marketing Management, 14th Edition (Indian Adaptation), Pearson Education, Inc., 2013 – To understand how Cadbury used the following components of competitive strategies to protect and increase its market share and thus was able to manage its PLC effectively –

  • • Expanding the total market
  • • Protecting the market share
  • • Increasing the market share
  • • PLC management through AID (Advertising, Innovation and Distribution)

 

2. In addition, students were asked to watch advertisements of Cadbury India Products and make some observations about the themes/concept of the ads.

Recommended Reading for the Faculty

It is highly recommended and suggested that the faculty intending to use/using this case study should read the following material (apart from what’s being suggested in PCUs) for enhancing the rigor and intended purport of the case study.

  • a) Theodore Levitt, “Exploit The Product Life Cycle”, Harvard Business Review, November-December 1965 – To get to the historical and evolutionary routes of PLC

 

Expected Learning Outcomes

At the end of this case analysis and discussion, the participants (students) were expected to understand the implications/answer the following questions that would expand their horizons of PLC management and competitive strategies (from the marketing perspective):

  • • How product life cycle (of a product category) can be managed through its product value chain through a firm’s competitive strategies
  • • How Cadbury India stayed relevant and stayed ahead of competition with continuous innovation through its product value chain
  • • How Advertising, Innovation and Distribution (AID) channels can be used to manage/extend the product life cycle more effectively
  • • What would it take for Cadbury India to increase the per capital chocolate consumption level in India from 80 per year to wither 10,000 a year or 5000 a year?

 

Positioning/Case Setting

This case study can be used for either of the following modules/topics in the Marketing Management Course:

  • • Competitive Strategies – To understand how companies have to device their strategies to stay ahead of its competitors
  • • Product Life Cycle – To understand the various stages of a Product Life Cycle and what the company needs to do to extend the life of its products
  • • Advertising – To understand how advertisements can be used in repositioning and changing the consumer perceptions with respect to its products
  • • Distribution – To understand the role of a company’s distribution network in growing its consumer base

 

Assignment Questions

  • I. What do you mean by product life cycle? What does ‘Product’ in product life cycle mean?
  • II. How do you think Cadbury India has been AIDed by Advertising, Innovation and Distribution channels to manage/extend its product life cycle across its product value chain?
  • III. How do you think, Cadbury India used competitive strategies (especially to do with expanding market, protecting its market share and increasing its market share) to manage its PLC?
  • IV. ....................

 

Case Analysis

The classroom discussion was facilitated under three broad sections as explained in Exhibit (TN)-I. However, the classroom discussion and analysis for this case study could be summarized through the Board Plan [Exhibit (TN)-II]............

Exhibits

Exhibit (TN)-I: Classroom Discussion – Suggested Plan

Exhibit (TN)-II: The Board Plan

Exhibit (TN)-III: Product Life Cycle Stages

Exhibit (TN)-IV: Other Shapes of PLC

Exhibit (TN)-V: Competitive Strategies

Exhibit (TN)-VI: Cadbury’s PLC

Exhibit (TN)-VII: Product vs Market Potential

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Abstract


This case study enables an interesting analysis of how a category's product life cycle can be managed over its product value chain using a set of competitive strategies (for protecting and increasing market share). Cadbury India, present in India since independence, July 1948, had been reinventing itself over the last seven decades by making itself relevant AIDed by its Advertisements, Innovation and Distribution. Having about 70% of market share in Indian chocolate market, Cadbury faces a major challenge: what should it do to increase Indian per capita chocolate consumption levels (at ₹80 per year currently) to UK (₹10,000 per year) and US (₹5,000 per year) consumption levels? AIDed (Advertisements, Innovation and Distribution) by its multi-pronged approach of changing consumption behavior of Indians in general and rural Indians in particular, would it be able to stay ahead of the pack?



Pedagogical Objectives

  • To understand how product life cycle (of a product category) can be managed through its product value chain through a firm's competitive strategies
  • To understand how Cadbury India stayed relevant and stayed ahead of competition with continuous innovation through its product value chain
  • To examine how Advertising, Innovation and Distribution (AID) channels can be used to manage/extend the product life cycle more effectively
  • To discuss and debate on what would it take for Cadbury India to increase the per capita chocolate consumption level in India from ₹80 per year to either ₹10,000 a year or ₹5,000 a year

Positioning/Case Setting

This case study can be used for either of the following modules/topics in the Marketing Management Course:

  • Competitive strategies - to understand how companies have to device their strategies to stay ahead of its competitors
  • Product Life Cycle - to understand the various stages of a Product Life Cycle and what the company needs to do to extend the life of its products
  • Advertising - to understand how advertisements can be used in repositioning and changing the consumer perceptions with respect to its products
  • Distribution - to understand the role of a company’s distribution network in growing its consumer base



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- Case Study
- Teaching Note (**ONLY for Academicians)
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