Strategic Analysis of Mondelez (Cadbury)

Team project on Strategic Management

By
Team 1
This Report Presented as Assignment for
Strategic Management
in PGDM.
Supervised By
Professor: Dr. Amiya Kumar Mohapatra
Sr. Associate Professor
Department of Economics

Fortune Institute of International Business

New Delhi
February 2020

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Team – 1
Harshit Verma (67)
Naman Jain (86)
Ria Gupta (102)
Rohan Gupta (106)
Shubham Parmar (115)
Vinayak Sharma (120)

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 PART-A

Introduction of Industry

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Introduction of Industry
Confectionery Industry
The confectionery industry consists of three segments: chocolate, confectionery
and rubber products. All three categories are characterized by a significant
amount of sugar and sugar substitutes. Sweets are generally low in trace elements,
but rich in calories and carbohydrates.

According to industry data, the global confectionery market was managed by the
Western Europe region based on generated sales. In response to health problems,
the number of products that are better for you is growing. Due to the demand for
natural colors, the trend of clean labels went to the confectionery category. To
meet this growing demand, many food companies have announced plans to
reformulate their products to replace artificial ingredients and simplify ingredient
lists.
On the US market, confectionery sales amounted to almost USD 34.9 billion in
2015 and are expected to reach USD 38.1 billion by 2020. Based on retail sales
tracked for 52 weeks ended July 8, 2017, the Confectionery Market in The USA
was run by two large confectionery producers: The Hershey Company and Mars.
Chocolate products produced by Hershey are well-known brands such as Kisses
and Reese's Peanut Butter Cups. A 2017 consumer survey found that about 49.41
million American consumers indicated that they most often eat Snickers.

Confectionery Industry in India

The Indian confectionery market reflects its global counterpart with a well-
established presence of international companies, a wide portfolio of brands,
frequent product launches, and intensive marketing and advertising campaigns.
The consumption of confectionery is no longer limited to children. Adults have
largely opened up to the consumption of sweets. Several companies launch
confectionery products targeted at adults.

Confectionery in India is generally classified as chocolate-based confectionery,

sugar-based confectionery and rubber-based confectionery. The categories are
further classified as follows:

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 Segment Sub-segment
Chocolate confectionery Moulded, count segment, panned
chocolate, eclairs, premium chocolate
Sugar confectionery Hard boiled candies, toffees, gum-
based confectionery, mints and
lozenges
Gum based confectionery Chewing gums, Bubble gums
Table 1 All Confectionery sectors in India

Confectionery sector in India is well consolidated with top players holding a

major share of the market; local subsidiaries of global confectioners are among
the leading players in India. Large players have a significant presence
in chocolate confectionery market while smaller players primarily operate at a
regional level and have sizeable base in sugar-based confectionery market
The Indian confectionery market was valued at around INR 95 billion in 2012-
13, growing at an annual rate of 10-12% since 2009-10. Of the total market, sugar
confectionery holds a market share of around 46% and the rest by chocolate and
gum confectionery segments. Owing to lower unit price than chocolate
confectioneries, sugar confectionery segment has registered higher volume
sales over the recent years Traditionally, small domestic players catering largely
to a regional market accounted for a major share of the sugar confectionery
market. However, in the recent years, multinational players have entered this
market and have introduced quality products. Chocolate consumption is mainly
centered around semi-urban and urban areas due to foreign exposure, rising
disposable income and consumers’ impulse buying. Players have identified age-
specific niche market segments within the chocolate confectionery market and
are undertaking intense advertising campaign to ensure effective brand
communication and positioning.
The confectionery sector in India is well consolidated and major players have a
significant market share; local branches of global confectioners are among the
leading players in India. Big players have a significant presence on the chocolate
sweets market, while smaller players operate mainly at the regional level and have
a significant base on the sugar sweets market
The Indian confectionery market was valued at around INR 95 billion in 2012–
2013, growing at a rate of 10–12% annually from 2009–2010. In the entire
market, sweets have a market share of around 46%, and the rest by chocolate and

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rubber product segments. Due to the lower unit price than chocolate sweets, the
confectionery segment has recorded higher volume sales in recent years.
Traditionally, small domestic players serving mainly the regional market
constituted a significant part of the sugar confectionery market. In recent years,
however, multinational players have entered this market and introduced high
quality products. Chocolate consumption is mainly concentrated in semi-urban
and urban areas due to foreign exposure, growing disposable income and impulse
shopping for consumers. Players have identified niche segments of the age market
on the chocolate confectionery market and are undertaking an intensive
advertising campaign to ensure effective communication and brand positioning.

The confectionery market in India is well rooted in the presence of international

players such as Mondelez (formerly Cadbury India), Nestle, Perfetti Van
Melle, Mars India and Lotte, as well as large domestic players such as Amul,
Parle, ITC, Ravalgon and Candico. International companies such as Ferrerro,
Hersheys and Lindt have a strong position on the premium chocolate market. In
the chocolate segment, Cadbury has a market share of around 65-70%, followed
by Nestle.

Major Players in Confectionery Market:

• Nestle
• Cadbury
• DV Chocolate
• Ooh La La Confectionery
• Honest Chocolate
• Mondelez International
• Mars, Incorporated
• Hershey Foods
• Arcor

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 PART-B

Mondelez International
group(CADBURY)

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Cadbury, a world leader in the chocolate market, began operations in 1824, when
a young Quaker named John Cadbury opened a store in Birmingham.
Initially, they sold coffee, tea, drinking chocolate and cocoa. Cadbury begins
operations in India in 1947. Imports of chocolate. Today it has over 5 production
offices and 5 sales offices in metro cities. The company is headquartered in
Mumbai. Cadbury in India has over 70% market share, which is the highest
Cadbury brand share in the world. Cadbury India, one of the most popular brands,
Cadbury Dairy Milk is the reference point for other chocolates in India and is
considered the "gold standard".

Cadbury India:
Cadbury India Limited is a segment of the Mondelez International group of
companies, and its activity is mainly to create beautiful moments of happiness,
by producing various types of aromatic chocolates, gums and many products,
as well as famous drinks and food that have mainly the best and proven food
brands in India .
Cadbury India's habits regarding work ethics, value system and quality
standards together make them the choice of India.
Cadbury India also expanded its operations to agricultural areas, the company
introduced innovations and improved the development of cocoa growing in
India in 1965.
For over two decades, Cadbury has collaborated with Kerala Agricultural
University to conduct research on cocoa performance. The Cadbury team
worked with farmers to enrich income through better performance in all
aspects of cocoa growing.
Cadbury India believes in offering the highest quality products that make the
customer delighted. From year to year, Cadbury has won the heart of every
6customer, thanks to which it has become a market leader in the chocolate
category in India. Cadbury Dairy Milk is the main main brand that is regarded

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as the gold standard among chocolates, Cadbury Dairy Milk is chocolate,
which is only the basic taste of Indian consumers.
Cadbury has its headquarters in Maharashtra, a sales office in New Delhi an d
production in Pune, Himachal Pradesh and Gwalior.

Figure 1 Offices in India

Objective:
Cadbury is the most known and leading chocolate producer in the world. Cadbury
is a marketing-oriented company. Its success depends on meeting the buyers'
requirements. You can do this by constantly adapting to buyers and learning about
their changing needs. In light of these conditions, Cadbury strives to develop
fresh products, expand current central brands and find better ways to increase the
value of current products.
Cadbury believes that good ethics and excellent company naturally go hand in
hand to generate the best long-term results for all stakeholders. Cadbury
determines the skills of its managers, and by providing them with the opportunity
to work and educate managers, these skills are further improved and developed.
In July 2007, Cadbury's Purple Goes Green project introduced the company's
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dream of tackling climate change. The goal was to minimize environmental
impact worldwide by reducing packaging surplus, energy consumption and
managing water consumption.

Financial Analysis:
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Name
2019 2019 2019 2019 2018

7,630 8,630 7,836 8,539 7,604

Total Current Assets
Cash and Short Term Investments 1,291 1,537 1,248 1,542 1,100
Cash - - - - -
Cash & Equivalents 1,291 1,537 1,248 1,542 1,100
Short Term Investments 190 263 - - -
Total Receivables, Net 2,927 3,175 2,891 3,536 3,006
Accounts Receivables - Trade, Net 2,212 2,492 2,179 2,781 2,262
Total Inventory 2,546 2,742 2,731 2,620 2,592
Prepaid Expenses - - - - -
Other Current Assets, Total 866 1,176 966 841 906

64,549 63,895 63,573 64,162 62,729

Total Assets
Property/Plant/Equipment, Total -
9,301 8,912 9,187 9,156 8,482
Net
Property/Plant/Equipment, Total -
16,105 15,564 15,848 16,011 15,245
Gross
Accumulated Depreciation, Total -6,804 -6,652 -6,661 -6,855 -6,763
Goodwill, Net 20,848 20,465 20,701 20,686 20,725
Intangibles, Net 17,957 17,642 17,943 17,958 18,002
Long Term Investments 7,212 7,040 7,095 7,004 7,123
Note Receivable - Long Term - - - - -
Other Long Term Assets, Total 1,601 1,206 811 819 793
Other Assets, Total - - - - -

15,322 17,120 17,798 17,721 16,737

Total Current Liabilities
Accounts Payable 5,853 5,322 5,312 5,566 5,794
Payable/Accrued - - - - -
Accrued Expenses 2,783 2,564 2,446 2,623 2,457
Notes Payable/Short Term Debt 2,638 3,253 3,780 4,065 3,192
Current Port. of LT Debt/Capital
1,613 3,698 3,696 2,936 2,648
Leases
Other Current liabilities, Total 2,435 2,283 2,564 2,531 2,646

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 37,274 37,089 37,480 38,334 37,092
Total Liabilities
Total Long Term Debt 14,298 12,651 11,804 12,474 12,532
Long Term Debt 14,207 12,593 11,764 12,437 12,532
Capital Lease Obligations 91 58 40 37 -
Deferred Income Tax 3,338 3,232 3,591 3,546 3,552
Minority Interest 76 68 81 81 76
Other Liabilities, Total 4,240 4,018 4,206 4,512 4,195

27,275 26,806 26,093 25,828 25,637

Total Equity
Redeemable Preferred Stock, Total - - - - -
Preferred Stock - Non Redeemable,
- - - - -
Net
Common Stock, Total 0 0 0 0 0
Additional Paid-In Capital 32,019 31,998 31,970 31,933 31,961
Retained Earnings (Accumulated
26,653 26,345 25,348 24,954 24,491
Deficit)
Treasury Stock - Common -21,139 -20,820 -20,684 -20,561 -20,185
ESOP Debt Guarantee - - - - -
Unrealized Gain (Loss) - - - - -
Other Equity, Total -10,258 -10,717 -10,541 -10,498 -10,630

Total Liabilities & 64,549 63,895 63,573 64,162 62,729

Shareholders' Equity

Total Common Shares 1,435.01 1,440.68 1,442.50 1,443.87 1,451

Outstanding

Total Preferred Shares - - - - -

Outstanding

* In Millions of USD (except for per

share items)

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 PART-C

Strategic Analysis

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Internal and External Factor Analysis:
Factors of External environment:
Cadbury is synonymous with chocolate consumption around the world. Opening
the store at the beginning of the nineteenth century, Cadbury has become a global
brand with factories and offices in Great Britain and North America, as well as a
significant presence in Asia and Africa. In 2008, the Schweppes brand was sold
to the Dr Pepper Group, and in 2010 Cadbury was acquired by Kraft Foods in the
USA. That is why Cadbury and its range are owned by the American
confectionery giant.

Cadbury pestle analysis that will also help shed light on various external factors
affecting the chocolate industry. We will put particular emphasis on Cadbury in
the UK, because the company was established there.

PESTLE analysis will examine the political, economic, socio-cultural,

technological, legal and environmental factors of Cadbury's external
environment.
Political:
Government fears about obesity have led to the introduction of a sugar tax
proposal and pressure on producers to reduce the amount of sugar in their
products (Butler 2015). Further proposed political responses to business
operations were also proposed after the hostile takeover of Cadburys by Kraft
(Morris 2014). Political decisions, such as savings and the resulting decrease in
disposable income, have also led to Cadburys 'shrinking inflation' in which the
size of the chocolate bar has been reduced, rather than leaving it the same size
and passing on the increased costs to the consumer ( Ruddick 2017). This process
began after the recession in 2008, and there are warnings that this will continue
during the Brexit trial (Mondelez 2017; Ruddick 2017).
Economic:
Due to the weak pound in 2010, Kraft could buy Cadbury at a price lower than
its actual value (Morris 2014). Low interest rates in the UK also enabled Kraft to
borrow 7 million pounds from a British bank to secure sales (Morris 2015).
Further economic costs of this sale included the transfer of production to Poland,
which was cheaper, and Kraft was perceived as focused on the amount of profit
that could be obtained from Cadbury, or rather on the protection of the brand itself

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(Wallop 2016). Focusing on Mondelez costs, regulations were also changed and
products reduced to meet the rising costs of production and ingredients (Ruddick
2017; Lewis 2015).
Socio-Cultural:
Cadbury responds relatively quickly to changing consumer requirements. Works
with Fairtrade in products such as milk milk. However, this may be at risk if
Mondelez undertakes its own certification of its components (Mondelez 2017).
Cadburys have also responded to campaigns to restore chocolate bars such as
Wispa. Growing health concerns have also led Cadbury to produce smaller bars,
as well as lowering sugar levels in its products (Mondelez 2017). By undertaking
this proactive activity in the face of threats to future legislation, Cadbury not only
responds to its customers, but may also be able to reduce the potential costs
associated with it (Butler 2015).

Technological:
Technological advances in production that can be developed through research and
development will help address the rising costs of raw materials and transport, and
this may include innovations such as heat-resistant chocolate that would be more
suitable for warmer climates in emerging markets (Mondelez 2017). Like many
organizations, Cadbury uses social media, such as Facebook, as a form of
connecting and communicating with clients (Cadbury 2017). This helps
strengthen the relationship between the organization and its clients, and allows
you to respond to changes in both the organization and its clients. Cadburys also
used gameplay-based applications to engage consumers in specific activities,
such as playing cream eggs in 2011, which was associated with the London 2012
Olympic Games.

Environmental:
Environmental issues for Cadbury include the number of packaging used, and the
organization has reduced the amount of Easter eggs consumed and the production
of organic green and black chocolate (Mondelez 2017). Other environmental
problems will concern the carbon footprint of their supply chain, including
production and distribution. Further plans include supporting farmers growing
cocoa beans to ensure that this is done sustainably. However, Mondelez suggests
switching from Fairtrade to his own project, which has been criticized for not

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being subject to independent control, and has also turned away from a respected
initiative (Wallop 2016).
Legal:
Legal issues affecting Cadbury are the requirement to provide detailed
information on ingredients and calories to help consumers make a choice based
on fat content. Other legal issues that Cadburys probably facilitated in future
operations have potentially arisen as a result of the hostile takeover of Kraft and
the possibility of reviewing the regulatory framework surrounding it (Morris
2014). Concerns about obesity can also lead to a strengthening of the regulatory
framework, such as the proposed sugar tax. Legal requirements in the United
Kingdom have increased for food producers due to EU membership, which may
decrease after the Brexit process is over. However, due to past food scandals in
the UK, consumers are unlikely to want food health and safety regulations and
ingredients to be considerably relaxed.

Factors of internal environment:

The internal environment includes factors in the organization. The internal
environment of the organization is shaped by the culture, structure, training and
development, goals of the organization, etc. All these factors influence the
functioning of HRM in the organization.

Change in culture:
Organizational culture is shaped by its values and beliefs. Organizational HR
practices should complement organizational culture. If there is a conflict between
culture and HR policy, the chances of a conflict between organizational and
personal goals will be high. If we take the Cadbury example, the change in culture
was felt after the takeover of Adams and Trevor Bassett, because the takeover
leads to the dilemma of cultural options. Cadbury copes with this situation by
combining both cultures so that employees can understand each other better and
the new culture created was known as the "work culture together". (Truss,
Mankind and Kelleher, 2012)

Change in strategies:
Changing the organization's strategy affects HR principles, because employees
must also be informed about the change in the organizational strategy. The

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organization applies different strategies at different times. The responsibility or
responsibility of the HR department lies in the synergy between organizational
strategies and HR policy. Cadbury is a great example of this synergy. When
Cadbury states that there is a need for collaboration to increase efficiency, a team
approach has entered the organization. When an organization changes its strategy
to increase the number of employees, the HR department has introduced a policy
of employee training and development. There are many examples suggesting that
a change in organizational strategies leads to changes in personnel policy.
(Mondi, Noël and Gown, 2005)

Organisation structure:
Organizational structure refers to the hierarchy in the organization. Determines
the flow of responsibilities within the organization. The hierarchy also affects
HRM decisions. An organization with a centralized structure has different
personnel policies than an organization with a decentralized organizational
structure. Cadbury has a much-centralized structure before the acquisition.
However, Cadbury soon finds that the centralized structure is not working well
for the organization because the organization is facing business problems in the
US. The reason for this was that UK executives are not good at differentiating
cultures. This leads to the division of the company into five units with its own
standard and culture.

Organisational objectives:
Organizational goals also affect HRM practices in the organization. The
organisation's goals change depending on the situation. A change in purpose leads
to a change in the employee work schedule. We can explain it using the example
of Cadbury. Cadbury's goal was to be a competition leader. They wanted to bring
the employee closer to competitive leadership. To this end, Cadbury begins to
offer its participation to employees in 1974. It acts as a motivating factor for
employees and begins to focus on delivering better results than before. (Avionic,
2013)
Internal and external factors have a very large impact on the organization's HRM
practices.

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Porter’s 5 Forces Analysis:
Porter five forces analysis is a framework to analyze level of competition within
an industry and business strategy development. It draws upon industrial
organization (IO) economics to derive five forces that determine the competitive
intensity and therefore attractiveness of an Industry.
Forces are –
Threat of new entrants
Threat of substitute products or services
Bargaining power of customers (buyers)
Bargaining power of suppliers
Intensity of competitive rivalry

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Rivalry Among Existing Players:
(HIGH)
• Many businesses are competing against Cadbury and planning to take over the
supremacy the company has for several years.
• Companies such as Nestle, Hershey’s, Ferrero etc. are Cadbury’s main rivals.
• Rivalry will always be strong among these companies because they sell from
the same types of stores and their products are similar in some respects.

Entry of Competitor:
(LOW)
• The entry of competitors will be difficult because there are already well-
established companies within this market.
• These include, mars, nestle, Ferrero, Kraft, Hershey’s and Lindt.
• This makes the barrier for entry very hard for another new company to start.
• They need high initial capital requirements.

Threat of Substitutes:
(MODERATE)
• Supermarkets tend to copycat popular chocolates (for example nestle Kit Kat)
and provide their own brand on the shelves at a cheaper price.
• Confectionary is brought for snacks and gifts. In this way, large no. of
substitutes exists, like chips, fruits, beverages, etc.
• Still chocolates scores higher than the substitutes as they are easy to preserve.

Bargaining Power of Buyers:

(High-Moderate)
• Cadbury’s buyers are scattered all around the world and they are in billions.
• The increasing number of competitors that offers the same type of products at a
lower cost might be the cause of customer loyalty alteration.

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• No switching cost for buyers.

Bargaining Power of Suppliers:

(LOW)
• Large number of suppliers.
• Cadbury has higher bargaining power than its suppliers.
• Cadbury can buy their raw materials for cheaper and more in bulk than a
medium sized business could.

Business Level Strategies of Cadbury

• Increase the width of chocolate consumption through low price point packs
and distribution focus. Their focus was on niche areas and focussed on
identifying a narrow target in terms of markets and customers.
• Increasing the depth of consumption by targeting the regular chocolate
consumers by having a dominant presence at the point of sale.
• Maintain the image leadership through a superior marketing mix.
• Be a significant player in the gifting segment through occasion linked gift
packs.
• Build critical mass in the sugar business by introducing value added sugar
confectionary products.

CURRENT SCENARIO OF CADBURY’S BUSINESS LEVEL STRATEGIES

Cadbury India is a fully owned subsidiary of Kraft Foods Inc. Cadbury India is
currently the world’s No.1 confectionery and biscuit company. Cadbury India is
the world’s second-largest food company with sales in approximately 160
countries.
Currently, Cadbury India operates in four categories viz. Chocolate
Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate
Confectionery business, Cadbury has maintained its undisputed leadership over
the years. Some of the key brands in India are Cadbury Dairy Milk, 5 Star, Perk,
Éclairs and Celebrations.

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Since 1965 Cadbury has pioneered the development of cocoa cultivation in India.
For over two decades, Cadbury have worked with the Kerala Agriculture
University to undertake cocoa research and released clones, hybrids that improve
the cocoa yield. Cadbury conduct farmers meetings & seminars to educate them
on Cocoa cultivation aspects. These efforts have increased cocoa productivity and
touched the lives of thousands of farmers.
The strategies, which Cadbury follows, include:
• Build a high performing organization
• Reframe their categories
• Exploit their sales capabilities
• Drive down costs without compromising quality
Other successful strategies adapted by Cadbury to their brands include:
The interactive campaign for “Pappu Pass Ho Gaya” bagged a Bronze Lion at the
prestigious Cannes Advertising Festival 2006 for ‘Best use of internet and new
media’. The idea involved a tie-up with Reliance India Mobile service, allowed
students to check their exam results using their mobile service, and encouraged
those who passed their examinations to celebrate with Cadbury Dairy Milk.
Cadbury Bytes is targeted at teens, as they are the largest consuming segment of
packaged snack category. They are also the gateway to the family, especially for
a new sweet snack. Cadbury Bytes is positioned as the ‘only sweet snack’ in the
world of salty snacks. Cadbury introduced Cadbury Bournvita Quiz Contest,
which started airing on April 12th 1972, is India’s longest running national school
quiz contest. It was really a good strategy to boost-up the sales. The task was to
get the youth audience to adopt Cadbury Dairy Milk in the sweet eating or ” muh
meetha karna” moments
The campaign of ” Jab Pappu Pass Ho jaye, Kuch Meetha Ho jaye” captured the
thought of celebrating a moment of delight with Dairy Milk. A campaign was
built around the idea of how “pappu” celebrated passing his exams with Dairy
Milk. A multi-media campaign was launched on TV, Internet, Radio and
Outdoor. The key was how do own the moment of ” pappu passing his exams” in
the media space
An innovative tie -up with Reliance web world was executed, wherein students
across 66 examination boards across the company could access their results on

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Reword through their Reliance mobiles. If they passed a message congratulating
them on their moment of delight from Dairy Milk was displayed
We can see that how Cadbury India has managed and implemented their
strategies over a period of time. The company has undergone various strategies
like digitalization, various innovation were made to improve their products. Apart
from that, they have introduced various products with good features and
promoted them with the latest mode of promotion activities.
It has been seen that one of the most important strategy at corporate-level was to
launch products with innovation and their market strategies like campaigning. It
was the trend with Cadbury, which has seen in the past decade.
Moreover, in the present situation the company has underwent a turnaround
strategy. It has been acquired by another company in Feb 2010 by Kraft Food. At
present, it is fully owned subsidiary of Kraft Food.
The impact of their strategies is evident by their sales revenue over the years.
Also, we can notice the tremendous continuous increase in their profits.

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 7,000.00
6,642.84
6,000.00 6,115.43
5,685.24 5,748.94

5,000.00

4,000.00

3,000.00

2,278.48
2,000.00 1,951.02
1,699.02 1,735.22

1,000.00

0.00
Mar-16 Mar-16 Mar-16 Mar-16

Revenue Profits

Hence, we can conclude through looking at the increasing trends that their
strategies are perfectly befitting for them to have a sustainable competitive
advantage.

PRICING STRATEGY OF CADBURY

Skimming Pricing: With skimming pricing, these prices are set very high to take
advantage of some people desire for a new product or design at any price.
Products like Oreo biscuits, Cadbury Silk, Cadbury Bournville are some products
which are kept at a slightly higher level than the competitors.
Economy Pricing: Cadbury comes out with different variants of their main
products to reach out to a large audience base. Cadbury dairy milk is offered in
different sizes and is priced accordingly just so as to cater to different customer
segments. Even products like Perk, Five Star, and Eclairs are priced
economically.
Bundle Pricing: With bundle pricing, Cadbury sells multiple products at a lower
rate that consumers would get if they purchased each item individually. During
festive times, Cadbury offers different chocolates/products bundled together at a
discounted price.
Cost Plus Pricing: Pricing methods which are based on the cost structure of
Cadbury that are favoured by accountants because they are supposedly more

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accurate and reliable. Cadbury is trying to maximise it profits. This method works
successfully because all costs need to be accurately accounted. In many firms this
is a very difficult process which is why the simpler mark-up procedure is used.
Cost plus pricing tends to ignore the demand for the product and the competition.
Positioning Pricing: Cadbury use this method to position prices that are set which
reflect the consumers view of the chocolate beam. Demand Bases Pricing:
Cadbury set their prices based on what they think the consumer is prepared to
pay. If they don’t then they won’t sell as good as they thought. If they do sell at
the customer’s price, they will have a good reputation and an output of more
customers.
Different Pricing: Cadbury may charge different prices sometimes for the same
product at different times. Its prices will be bases on the elasticity of demand for
the chocolate bean.
Discount Pricing: Cadbury is a competitive market which buyers should be able
to obtain goods for less than the advertised price. Many firms can be forced into
price-cutting if they are short of cash or need to increase sales quickly.

How the functional manager should operate?

1) The marketing department should focus on the niche and focussed marketing
strategies in which their focus should be on a particular segment.
2) The marketing department should continuously focus on new product
development and innovation. They should have a track on their product life
cycles.
3) The marketing department should also tap the unserved needs of the customers.
4) The operations department should focus on the channel distribution and should
have both forward and backward integration of the intermediaries.
5) The operations department should have a continuous check on cycle time and
bottleneck time of their supplies.
6) The sales department needs to ensure that there is no shortage of supplies and
their products have better visibility than their competitors.
7) The HR department should focus on the customer satisfaction and handling
their queries which adds up to the image of the company.

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8) Customers, being the king, have a dominant say which has to be addressed
carefully by the HR department.
9) The Finance Department needs to take care of the CSR activities which
enhances the image of the company.

Conclusion:
• Cadbury is a well-established firm with customers spread in whole world.
• It is difficult for other firms to overcome its popularity.
• Economical distribution using proper supply chain management is necessity.
• Brand loyalty should be maintained.

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SM Assignment