A Report On Cadbury Management Essay
The successful development of new product is the way in which companies can achieve competitive advantage. In NPD process there is a great. More than 40% of all new product introductions fail at launch. For effective NPD has to innovative corporate culture so that everyone in organization is confident to be innovative in their work. Cadbury takes innovation very seriously and it is a major part of Cadbury strategy for success.
There are many ideas and some of them generated by chance. But, only few of the products make it through to the end of process. Further a product goes through this process, the more expensive it becomes. As products progress, the company is making an increasing commitment in terms of resources. Once a product is developed, the launch marketing costs are significant so a company must carry out extensive market research ensure a product has the best chance of appealing to the market.
The following research reports suggest that Cadbury’s should launch a breakfast Bread aimed at the children and adult indulgence sectors of the market. Cadbury are used two types of research method. This known as Secondary Research and Primary Research Methods for customer research.
1. Secondary Research Method
Secondary research is a method of research carried out by another company or organization. Secondary research is research done by a third party company. The information gained is then analyses and made available for companies such as Cadbury’s. The company may have to purchase this data from the third party source. More often than not though the government publishes papers with all the data and these are free for companies to view.
Secondary research is often used because it saves time. It saves time because you do not have to go out and collect the data and then analyses it. It also saves money; fewer people are required to carry out the research. Cadbury using secondary data because it will save time and can prove to be better than collecting the data first hand.
Cadbury intend to use the Out sources of data because they contain relevant information that require on the breakfast Bread market.
Market Research Source 1
In the market overview of breakfast Bread. The report clearly shows that the market has grown. The most growth in the market in between 2001-2003 where the market grew by 6.0%. The 6.0% growth was well above the compound annual growth rate in between 2004-2006. The compound annual growth rate this period was 3.7%.
This research is significant to Cadbury’s because it shows the breakfast Bread market has been growing for the past 5 years. The figures also give reason to believe that the market will keep growing for years to come but at a slower rate.
The research report supports the argument that Cadbury’s should launch a new breakfast Bread. The figures show an increase in growth.
Market Research Source 2
In Second market research executive summary of the breakfast Bread market, the market is referred to as being a ‘well established grocery sector’. This means it is going to have to be something big to stop growth and induce a steep decline in the breakfast Bread market. The research also shows that breakfast Bread sales account for an estimated 63% this is almost two thirds of the sector. The research says that the breakfast Bread market has become ‘static’ it gives reasons for this. The main reason being because of intensive price cutting initiatives. The breakfast Bread manufactures have also diversified into other areas of the market, mainly aiming new products at people who skip breakfast or eat their breakfast at their desk in the office.
This report shows that In this sector Cadbury’s want to launch their breakfast Bread, the main growth has come from niche products. The main breakfast Bread growth has come from organic Bread and adult indulgence products.
The report states that breakfast Bread have shown a volume growth but have shown a decline in value growth. This means people are buying more Bread but due to lower prices the value has declined. This report estimates there will be a decline in volume growth over the next few years as well. This report however does show that there is still a lot of life left in the breakfast Bread market in some sectors with the children’s varieties and adult indulgence favoring very well. The UK retail sales of these two areas of the market show a growth over the past few years and it is estimated by this report. This growth will continue.
This Report shows that Bread Partner lead the way in two areas of market, the share of the manufacturers market and share of the retail market. This means that Bread Partner is the top dog in the breakfast Bread market. Bread Partner has however seen a decline in their share of the market over the last two years. The Bread Partner range leads the way in the breakfast Bread market with the main Bread Partner label Brad taking 9.0% of the market. This is not the best selling breakfast Bread though. The best selling breakfast Bread is the Bread Partners Shredded Wheat range. The range takes in 11.1% of the total retail sales.
The report supports the argument of Cadbury’s launching a breakfast Bread as long as it is aimed at the correct segment of the market. That of course is being the children’s varieties and adult indulgent. Due to the competition in this area of the market Cadbury’s may not enter the market.
2. Primary Research Method
Primary research is data retrieve by doing some fieldwork. Primary research can often prove more relevant than secondary research because the primary research can be co-ordinate to the facts and data you want to retrieve.
Cadbury using primary research to get data because often secondary sources are used by other companies as well, for Cadbury’s this could mean that Nestle and Mars are using the same research. These are not good because they could find a niche market before Cadbury has and take the custom. Primary research means all the data that is collected is kept confidential within Cadbury’s and the competitors do not know what has been collected. Primary research is often better because the questions and data collected can be different from that of the competitors and therefore can prove to be more rewarding in finding a gap in the market and to launch a new product.
The main findings from this primary research are as follows: Cadbury’s need to work on the promotional aspects of his products. There are not enough competitions for the consumers. Cadbury’s also need to be more competitive with the pricing of their products. Overall though the taste of the products, Packaging on the products and the current advertising is very good.
Cadbury’s should really aim to provide a Bread, which tastes as good as the current range of products, but also be healthy and have good nutritional content.
The price to begin with should be very low and competitive to attract new customers and then as the product becomes much better established the product price should increase.
In this part produce a SWOT and PEST analysis to analyse the factors that may prevent Cadbury’s launching a product into the breakfast Bread market.
A SWOT analysis is a general and quick examination of a company so they can get accurate information on their strengths, weaknesses, opportunities and threats. It analyses the internal strengths and weaknesses, and the external opportunities and threats
Cadbury’s has a world known brand name that is associated with quality. Cadbury’s also have a large distribution and its bars can be found all over the world. Cadbury’s has a very good customer service centre and has a large variety of chocolate bars to suit everyone’s taste. Cadbury’s is the biggest name in the chocolate market and is the market leader. Cadbury’s has very effective promotions on their products. Cadbury’s has a very good research and development department leading to new products. Cadbury’s has built its name around a high quality almost faultless product quality.
Cadbury’s has its products priced higher than most of its other competitors. A large range of the Cadbury’s products has reached the maturity stage of its life cycle. The costs of the company are too high. Cadbury’s are making a low profit per bar due to the high costs.
Cadbury’s has still got a lot large room for expansion into South Africa, Asia and South American regions. Cadbury’s could look to develop new products in new markets. Due to the growing product range Cadbury’s could launch new products. Cadbury’s could diversify into new markets e.g. Breakfast Bread Market.
Cadbury’s have got a lot of competitors in the market and must be wary of their position as market leader. The pricing on their products is too high Cadbury’s could lose sales if a competitor was to launch a new product to rival Cadbury’s best sellers. Legislation on ingredients could cause huge problems. Healthier options could cause problems to Cadbury’s with trends tending to favour the new healthier options. New products from competitors could cause problems to Cadbury’s as they could begin to lose their market share.
A PEST analysis shows the external factors outside a company that could affect the business. PEST stands for Political, Economical, Social and Technological.
This part of the PEST analysis deals with the government influences. These are the laws and the recent changes in the laws: The main laws that will affect Cadbury’s are the consumer protection law. These influence changes in food labelling. The food labelling shouldn’t be too influential as expect Cadbury’s to label all their goods properly to begin with. Changes in manufacturing laws will also greatly influence Cadbury’s as they may have to change the way they produce their Bread. This could lead to the introduction of new mechanical equipment being required or more thorough checks on the current equipment. If new equipment is required it could prove to be very expensive.
The Weights and Measures Act: This act should not affect Cadbury’s a great deal as all the equipment and scales used should already be at that of the highest standard.
The Trade Description Act- This again should not affect Cadbury’s, as all the labelling on the products should be correct and thorough giving all the ingredients.The Sale of Goods Act:- These state that Cadbury’s should not mislead the consumer. There are currently 3 conditions. If the government was to introduce a few more it could prove to affect Cadbury’s.
On the whole though the main act Cadbury’s should be aware of is the Weights and Measures Act, and the Food Safety Act. I have mentioned these two as being the most important because Cadbury’s are a straight forward, honest company. They don’t want to jeopardise their reputation by doing some dodgy business. That’s why changes in the weights and measures act and food safety act are all they should be aware of. They should check their equipment regularly and check the food safety regulations.
This part of the PEST analysis deals with a range of external factors in the economy. The state of the economy is the main factor. If the country were to go into recession the consumer spending would also drop due to the unemployment. The recession would bring down the sales of a lot of goods mainly the expensive things, which are not a necessity. (E.g. the food manufacture industry would have a major decline in sales, as would the tourism industry and the clothes industry.) The current economy is well in favour of Cadbury’s launching a breakfast Bread. The interest rates are low and consumer spending is very high. Other economic factors that could affect Cadbury’s launching a product would be a rise in inflation. This is a rise in price over time.
There is a variety of different social influences, which could affect the consumer, and in turn Cadbury’s. A good example of this is the change in eating habits. The primary and secondary research both show that consumers are moving towards healthier eating habits. The research shows people want a healthy breakfast Bread.
The increase in computers and the Internet could influence sales. The number of transactions taking place over the Internet is high and people can now buy their shopping over the Internet. The use of automation in factories could influence Cadbury’s as they could produce more Bread with a smaller work force.
The main factors, which could stop Cadbury’s launching a breakfast Bread, are the strength of its competitors. As per primary research and some secondary research show that the top 3 in the breakfast Bread market are Kellogg’s, Weetabix and Bread Partner.
Cadbury spending money on research and development for remove some potential problems later in to the process of creating a new product. Cadbury make sure about ingredients and machinery that available and product reach to customer in good condition.
Legal & Compliance advise on the product is safe and legal. The product name is unique and international use. The product lives up to the claims being made about it. Involving this department Cadbury safe his self and away from trouble. Cadbury fell more confident about launching product.
Cadbury’s used all latest technology. Development teams up to date with all the latest developments in technology. So it can make it possible to create innovative products or packaging. New materials and finishes present new design opportunities and possibilities. Computer Aided Design (CAD) tools are used to produce designs. It can be used to create an image of how a product might look on the shop shelf to see how well it will stand out.
Before the introduction of computer control, manufacture involved a series of operations individually supervised at separate control points. Now, many processes on the production line can be undertaken by machinery, supervised by one person from a control room full of computer screens. The use of computers to perform fast, accurate, repeatable production processes reduces the possibility of human error and helps make sure that the product is always exactly the same.
The training & production department have expense on sources and buy ingredients & row material. They sets up and monitors the machines and perform quality control test Like Product weight, Temperature and sampling the final product.
Sales team works for contacting potential suppliers to encourage them to stock the product. They negotiate contracts and sales agreements and maintain relatationships with distributors.
Cadbury uses “choose Cadbury” to highlight the positive emotional value of their brand however Cadbury has various product range that meets the needs of every consumer from adult down to the children, they also produce different range of products during different seasons/ festive period, for example: Christmas, Easter, and other calendar landmark to motivate their customers. The “choose Cadbury” strategy is used to build a link between chocolate and different events to ensure there’s a Cadbury chocolate product suitable and available for every occasion.
This is the distribution channel used to get goods to customers. It must be in place before a product is launched. Cadbury’s already had an wide network of wholesaler and retailers. These provided a distribution system for breakfast Bread. The breakfast Bread should be marketed strongly in supermarkets and convenience stores as these are the places where Bread tend to be bought. With all elements in place breakfast Bread was launched in March 2010.
New product development is both a lengthy and expensive process. It always contains an element of risk. However if carried out correctly product development leads to increased sales and profits. For Cadbury the process has resulted in a unique new product being successfully developed and integrated into the product portfolio. Snowflake has made a successful launch in the marketplace and will undoubtedly contribute to Cadbury’s future success.
Cadbury continuing to develop the chocolate bar in order to increase the marker share of the confectionary market sector. Cadburys is a well known quality product and has used this as its unique selling point. However, competitors are now also being associated with quality and brand names. For instance, Mars has developed ‘Galaxy’ a milk chocolate bar similar to Dairy Milk which is also a milk chocolate bar, this product is also associated with quality and developed a brand name for itself.
Cadbury Schweppes reorganizing its business by separating in to two brands to make its self more efficient and add more value to the company. Cadbury could be worth around £7bn and Schweppes could be valued at £9bn so by doing that Cadbury can get better results in sweet business and Schweppes can be more profitable in beverage business. As a result of breaker in to two company shareholders will have two different shares, if everything goes well shareholders rise their profit much more than past”
Cadbury Schweppes one of the most important long term strategy is expanding its market share and make its brand more global, because of that “Cadbury Schweppes bought Turkish gum giant which has nearly 50 per cent Turkish gum market. Also it’ aim to control and reach Middle East, Eastern Europe and Russia markets. In addition, Cadbury wants to get valuable cutting-cost techniques from Turkish company by adopting it’s business.”
Cadbury is very successful at this as it just about always satisfies their customer’s needs. Like for the Flake it mostly appeals to women so on occasions such as Christmas, Easter and Valentine’s Day the Flake is far more popular in all of the confectionery shops. This shows that Cadbury is successfully selling their products at the right time, of which this also the time periods of their peak sales.
Cadbury are also very well known for their very competitive prices which are reasonable and in some cases far cheaper and healthier than other leading brands such as Nestle and Mars For instance, consumers now demand foods that are low in fat or calories and salt.
The role of managerial judgement in making due allowance for intangibles is clearly important, and could materially be affected if the Cadbury recommendations were followed. The majority of firms felt that existing methods of appraising AMT investments did allow a fair comparison with conventional alternatives, 87 per cent taking this view with only one in eight finding their methods at fault. While respondents might not be expected to condemn practice in their own companies, the size of the affirmative response may reflect the view that sufficient informal flexibility is used. If so, judgement may simply override financial appraisals rather than being incorporated in a more sophisticated manner.(1993, Pike, p.141) The survey confirmed trends in the use of appraisal methods and showed the distinct perceptions of influencing factors held by firms. A slow pace of adjustment was revealed within companies and the financial environment to capital investment decision making and the financial requirements on such investments.(1991, Primrose, p.45) The effects of interest rate changes on investment decision making are muted and, with exceptions, more indirect than direct. This at best damped adjustment is not necessarily illogical for individual firms, but the effects are more widespread. With manufacturing investment at lower than desirable levels, economic recovery is jeopardized by capacity constraints and macroeconomic responses to consequent inflationary and balance of trade pressures.