Cadbury Schweppes Case Study

Cadberry/Schweppes

Cadbury/Schweppes

Cadbury has a rich history that begun nearly two centuries ago. In 1831 John Cadbury began manufacturing cocoa products in the United Kingdom that were used in primarily chocolate drinks. The company later went through a series of evolutions to become the multinational confectionery company known today. Its original introduction into the confectionery market was a direct attempt to stem off the Swiss dominance that overtaken the industry. Today's market is somewhat similar to the market of the early twenty first century in the sense that there is still a large dominance by one of Cadbury's competitors.

Strengths

By the late twentieth century Cadbury virtually dominated its home markets which were mainly comprised the European market and that of former British Commonwealth nations such as Australia and New Zealand. In these markets, Cadbury gained notary and product loyalty through early expansion efforts. In this particular industry, it is difficult to introduce new products since brand loyalties have already been established with existing brands. To attract consumers to a new product in this market, it takes massive amounts of advertising to sway consumers away from their favorite brands. Only a small percentage of attempts at taking new products to this market succeed as a result and a large component of success relies on having sufficient patience and capital to fund new product expansions.

Cadbury has worked to build significant brand loyalty in what it would consider its home markets and has also had several products that dominated in certain narrow product niches in international markets such as the United States. In the U.S., some products like Coconut Mounds, York Peppermint Patties, and especially Cadbury's Creme Eggs operated with a high level of success. These successes serve as the parent company's strongest asset because they have acted to build brand awareness in international markets where brand loyalty is crucial.

Weaknesses

The case highlights instances of gross mismanagement of operations as well as the expansion strategies in general. Examples of such mistakes are made evident by mention of management's failure to consider the lengthened time in which supply chains need for products to reach international markets. In the U.S., which is a critical market for multi-national companies, Cadbury attempted a new product entry with a stale product. Many consumers rightly rejected the aged products for fresher domestic alternatives that they were already familiar with.

Another mistake was the failure to adequately account for the consequences of product portion standardization in international markets. In the U.S. many consumers were attracted to the larger portions offered by the CDM bar since it offered a larger portion than the domestic competitors. However, after Cadbury reduced the products size in attempts to standardize product portions it suffered immensely. Consumers perceived the larger size as the value added portion of the premium price relative to competitors and when Cadbury took this away the product blundered significantly.