Introduction
Cadbury merged with Schweppes in 1969. Currently, this successful company is employing approximately about 43,000 people worldwide. Today, Cadbury Schweppes is the world's fourth biggest supplier of chocolate and sugar confectionery.
One of its products, Dairy Milk was introduced in 1905, and has become the most successful molded chocolate in UK history and the basic ingredient for many other Cadbury products. 95 years later, Dairy Milk is one of the world's most famous brand names and the company's leading chocolate bar by revenue.
Sales from Cadbury's Dairy Milk alone are estimated at over £135 million for 1995. Cadbury considers its success is based on three factors: quality, value for money and good advertising.
I am going to apply an analysis to Cadbury's current situation and its position to enter a foreign market
It is important to investigate on the internal and external environmental forces for the Dairy Milk in a foreign market. Relevant organisational and industrial information is required for the development of a SWOT analysis PEST analysis and PORTER'S 5 factors. The analysis of the environment and the consideration of the situational factors when designing marketing planning are critical as it would allow Dairy Milk to capitalise on organisational strengths, minimize any weaknesses, exploit market opportunities and avoid any threats.
SWOT ANALYSIS
Strengths
Cadbury's could get these advantages in going abroad. By entering a foreign market the company could:
• Maintain a stable growth of a company by maximising the use of its production capacity and which increases economies of scale.
• With its brand name, Cadbury could counterattack the competitors it faces in the domestic market by attacking their domestic market.
• Keep up with the financial strength by increasing its sales and profit.
• Acquisition rules in UK reduce its dependence on the UK market and therefore diversify its market specific risks.
• Overall, Cadbury has been successful through the new products.
Another strategy that has been successful for Cadbury involves striking strategic partnerships with other large companies.
Weaknesses
generally, as Cadbury has a weak position in the US market, thus, need to change its target to a different location. it also has a small total of market share altogether. Therefore in order to market the product in a new foreign market successfully, Cadbury would have to find out on how it can improve in order to have great performance. It is also good to find out what are the situations that they could avoid in order to be successful. In order to market products the following issues should be considered:
• Total production of chocolate bars and confectionary within the new market entererd.
• Consumption of chocolate products, which has been growing until 1991, remained fairly static in 1992, reflecting a fall in demand.
• Sales of milk chocolate bars has been slowly decreasing.
Opportunities
Through organic growth and acquisition cadbury's could make more opportunities on a worldwide scale. The Timeout Candy Bar market is growing worldwide. This company is also at the same time distributing its products via the internet. Besides developing the "Low Calorie" line of chocolates and sweets, they also offer the "Sugar Free" sweets line. Therefore in order to get the product into a new foreign market Cadbury would have good opportunities in store for them.
• To release new products into a new market which could increase market share
• To enter into a new market would be easier for them as they are one of the largest confectionary brands in the world
Threats
Due to its confectionary products, it is very important for Cadbury to be aware of any present or upcoming threats. The company should take note of the changes in the consumer's buying trend. It is perceived that consumers might shift from chocolates to "Healthy" snacks. If this were to happen, there might be a poor product development which would tarnish the Cadbury's name. Needless to say price wars would occur between its competitors like Mars, Hershey and Nestle. However if Cadbury is to market its products, the company has to be aware of the risks it could encounter. It might:
• Not understand foreign customer preferences and fail to offer a competitively attractive product;
• Not understand the foreign country's business culture or know how to deal effectively with foreign nationals;
• Underestimate foreign regulations and incur unexpected costs.
• Threat of entry due to the competition growing through acquisition or mergers.
Obviously any foreign entry decision must take the abovementioned elements into account.
• The Ansoff matrix
• Product
• Present New
• Market
Penetration
• Product
Development
• Market
Development
Diversification
Because Cadbury is introducing its brand name to a new region, in relate to the Ansoff matrix above, it can be argued that it is under market development. Although the company has come up with a few current products, it is targeting to a new market. Despite the competition against the rest (Hershey's, M&M Mars and Nestle), Cadbury has to have the bargaining power of the buyers in order to be competitive in the market. Although the company need to know that substitutes are not a major concern. Finally, to conclude that Cadbury is in the Market Development, they would have to have the bargaining power of suppliers as they are not in power position due to commodities market. And also to be aware of the cost of packaging materials as it has increased over time.
There are a few strategic recommendations that Cadbury could come up with in order to market its products, also to market it products successfully. After much discussion on the position of the product currently, the following recommendations could be suggested:
• Increase Involvement by implementing a campaign to Launch major brands of chocolate which has already been done in America.
• Increase Marketing and Promotion globally.
• Focus on non-chocolate development by developing line of non-chocolate candies.
• Develop Novelty/Specialty markets for example online distribution.
• Aggressive new product development—low calories, sugar free and sweets. This has to be done by researching and developing new products.
PEST Analysis
The following list is of external issues which could have an affect on Cadbury, I will be listing down these problems in four main sections which are political, economical, social and technological factors, which focus on separate parts from outside of the business which could affect businesses such as Cadburys.
Political factors:
This is concerned with how political developments, regionally, nationally and internationally may affect a business.
The following is a list of political factors which could possibly affect Cadburys:
• A change in the government may affect the capital of Cadburys, as it may decrease if the government introduces new policies and taxes, which would mean that they would have to pay more direct tax.
• Political instability could appear in the UK. This could cause unrest within a country and could also even have an affect on people buying products from Cadburys, as fewer tourists may come to the UK.
• If the government was to raise tax on businesses selling goods, this would affect Cadburys because they would have to pay more tax. This would leave them with less capital for future investment and development.
Economical factors:
This includes things such as government policy, Monetary policy and Interest rates. Also can contain Economic Variables, Inflation and Unemployment levels
The following is a list of economical factors which could affect Cadburys:
• If the government was to increase interest rates, this would mean companies wishing to expand would need to take out loans, leaving them to pay extra interest to the bank, this inturn could affect the company.
• Increasing interest rates could lead a business to raising its prices, therefore overcharging customers to pay for the extra interest, this in turn may lead to customers buying from other major competitors, and this could also may also need the company to charge extra to pay for the extra interests.
• If the level of inflation was to rise this may cause demand to fall, therefore leaving the business, which could have a huge affect on a business such as Cadburys.
• Rise in inflation could leave a business with less capital, this could make Cadburys lose workers as the human resource management department could also be affected with workers not receiving there correct wages.
• The level of inflation could have an affect on companies such as Cadburys, because if prices were too high this could affect consumer spending trends causing it to slow down.
High unemployment levels will mean that people within the UK would have less money to spend, this could affect Cadburys as customers may stop buying there product.
Social factors:
Factors from social factors which may affect businesses such as Cadburys could include things such as consumer trends.
The following is a list of social factors:
• If the market is experiencing a rise in demand for certain products, then this would mean that Cadburys would need to employ more staff to help meet the consumers demand, this means having to spend more money having to spend more money.
• If demand was then to fall Cadburys would then have extra employees to pay for, therefore they would lose money as they would have too many workers.
• Demographic change could also affect the company, for example if there was an increase in say the over 40's market the company would then need to employ new strategies and marketing techniques in order to encourage this market segment to purchase products.
Technological factors:
Factors from technological factors which may affect businesses are the following:
• If demand was to increase, Cadburys would have to produce products more efficiently and more productively, which may mean buying more high tech and advanced equipment to do so.
• Purchasing products may have to be made easier, new technology can acheive this and not make them more proficient it will help Cadburys to keep up with any other competitors in the market.
• Staff training also becomes an issue when introducing new technological advances because this means that the company would have to pay extra for the staff to be trained.
Five Forces model of Porter is a strategy tool that is used to make an analysis of the attractiveness of an industry structure. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces:
entry of competitors
the entry of competitors will be difficult because there are already well established companies within this market these include, mars, nestle, ferrero, kraft, hersheys and lindt. These companies dominate the confectionary market with there own particular types of chocolates. This makes the barrier for entry very hard for another new company to start.
threat of substitutes
the main threat of substitutes which cadbury's and any other confectionary brand is the supermarket own brands this is because they tend to copy cat popular chocolates for example nestle kit kat and provide there own brand on the shelves at a cheaper price.
bargaining power of buyers
for cadbury's they have a large buying power being one of the largest confectionary producers in the world, but this may be threatened due to the june 2006 recall of chocolate bars which contained salmenella this has been said to affect cadbury's and should lose some of their buying power.
bargaining power of suppliers
cadbury's have the main power over its suppliers because they are so large companies supplying them need their business so cadbury's can use economies of scale and buy there raw materials for cheaper and more in bulk than a medium sized business could.
rivalry among the existing players
Companies such as nestle, Hersheys, ferrero etc are cadbury's main rivals because they are also long established confectionary brands and like cadbury are developing new ranges of products new promotions. Rivalry will always be strong among these companies because they sell from the same types of stores and there products are similar in some respects.
Conclusion
In order for Cadbury to reach the peak of achievement, the company would have to stress on the global growth of the product. It can be a risk to market it in a new region, but with careful study of the target market segments and its economic position, it can be an attainment. Cadbury should also look into other countries like the Asia Pacific in order to market its products popular globally. But then again, careful considerations to look at its major competitors and to obtain the rules and regulations of a certain country are equally important.
Another strategic plan would be a joint venture. Since Cadbury Schweppes is a company that produces not only chocolates but also drinks, it should market a new product and maybe get into the product development. However, what needs to be thought about is that it is not as easy as marketing Cadbury's current products. It took Cadbury almost 165 years to develop itself into the business that it is today.
Needless to say that in order for the company to market its products globally, it is understood that heavy capital and marketing spending has to be made. But being the company that it is now they will be able to achieve this high spending in order to enter the market.
Last but not least not to forget that Cadbury should need to strengthen the brand name of its products. This is important due to the fact that since it is popular in the UK and US, the profile of the products should be maintained.
References
History of Cadbury, www.cadbury.com.au
SWOT analysis – Understanding your Strengths, Weaknesses, Opportunities and Threats, Mindtools website - www.mindtools.com
Boone, L., Kurtz, D. (1992) Contemporary Marketing, Fort Worth, TX: Dryden Press.
Developing your Strategic SWOT Analysis." Austrainer. (1999) website - www.austrainer.com
Ferell, O., Hartline, M., G., Luck, D. (1998) Marketing Strategy. Orlando, FL: Dryden Press.
