External Situational Analysis for Cadbury Company Marketing

Cadbury-Company and Marketing External Situational Analysis

Introduction

Several companies share large markets in the United Kingdom in Chocolate and Confectionery Production. With an external analysis evaluation in Cadbury’s chocolate confectionery brand, the company is Cadbury, formerly Cadbury’s and Cadbury Schweppes. This particular company makes production, markets, and sells products of chocolate confectionery, and the range of products includes chewing gum and cough brands, confectionery, and chocolate. According to statistics based on a million responses from the public, popularity, which is the percentage of people with an attitude that is positive towards a confectionary, shows that Cadbury is 83% popular, which comes second after Maltesers at 84%. The adults in the United Kingdom who eat chocolate are rated 94 %, with 61% eating chocolate more than once a week. The critical role of this is the emotional links of chocolates which is why it is consumed throughout the day. The analysis of the external environment of Cadbury Company will be outlined. This will include identifying opportunities in the market of the United Kingdom that the company can act upon and the threats ahead so that the company can avoid. This will then lead to proposals of modified products for the Cadbury portfolio.

Macro Environment Analysis

A PESTLE analysis of Cadbury demonstrates that the multinational confectionery company has addressed changes and pressures in the United Kingdom macro-environment and internationally. A particular emphasis will be made on the U.K. since this was the company’s originality.

Political

The change of government from Labour party to Liberal Democratic in the United Kingdom context is bound to have so much influence on the operations of Cadbury Company (Arya and DineshBabu, 2021). According to the estimates that have been made lately, the eight Cadbury factories that are situated in the United Kingdom had a total of three thousand employees. However, Cadbury’s hiring decisions in the future may be affected by the stringent restrictions on the entry of workers who are skilled from the rest of Europe.

Another political factor that may affect the management of Cadbury, its payment to the shareholders, and the company’s investment is the imposition of taxes. An example, in this case, is the rise of Value Added Tax in 2010 by 2.5%, which contributed to the increase in chocolate prices hence a reduction in sales (Arya and DineshBabu, 2021). Moreover, in 2007, Cadbury Schweppes, in the face of increasing expenses on operation and reduction of margins, decided to outsource a large portion of H.R. and accounting to a firm belonging to the Indians. This can result in the loss of many jobs to other business units that may decide to follow suit. Conversely, this will lead to employment opportunities in countries like India.

Economic

With the global downturn, Cadbury’s expansion plans reduced the customers’ disposable income, but the sales remained steady. Surprisingly, the company was able to have an annual increase in profits by 30%, especially on the sales made from Trident and Dairy Milk. However, due to the recession, the company was only able to hit their revenue’s lower end of 4-6% in 2009, which marked the recession’s peak. Dairy Milk and Trident Gum’s sales were good, and even the other brands, for example, Halls, increased their annual sales. Cadbury has focused on new recipes to address the rising production due to the cost-conscious environment.

Social

Cadbury Company is run by the Quaker family, whose primary basis of running the company was the opposition to selling alcohol. The company deals with the sale of coffee, cocoa, liquid chocolate, and tea which are socially acceptable worldwide; hence the company was born due to social factors. However, even though these products are socially acceptable, there has been controversy about the products catering to the Muslim markets since they are ‘Halal Certified.’ Concerns that there are increased cases of obesity due to the consumption of chocolate, especially by nutritionists, may affect the company in the future.

Technology

The company’s production and packing process has been affected by technology over the years. This is with new machines that blend cocoa and coffee gains. Concerning this, some moves like using systems that test pathogens have been made, and chocolate heat-resistant filing patents have been used. Technology also helps Cadbury reach out to its customers through social media, creating awareness for its products.

Legal

The company finds it necessary to maintain stringent copyright regulations because small companies that sell local brands try to use its logos and the symbols that the company uses. Legal laws demanding that each producer display contents on the packages of their products are more severe in European countries than those in other regions like Africa. Concerns arising from obesity issues may impose stringent laws on taxes on sugar. This is a threat to the company because its aim of expanding should keep a tab of the laws in those regions. The company, however, has a good brand name that makes it easier to be acceptable in new regions.

Environmental

Cadbury has the drive to fight against the change of climate, which is a regulation set by the U.N. that requires companies to reduce the emission of carbon dioxide through their operations. This can be achieved by educating farmers to be more productive in eco-friendly environments. Through its cocoa life program, Cadbury aims to reach out to more farmers to teach them about reducing pesticides and creating a positive perspective about preserving the environment.

Micro Environment Analysis

Five Forces Analysis

The bargaining power of suppliers- the degree of differentiation determines the strength of suppliers. Portions of the sales made by the company are gotten from a specific firm; for example, it obtains cocoa beans and butter from Venezuela in Wes Africa. The company has many suppliers, but none takes more than 10% of raw materials. Therefore, the suppliers have a minute influence on the company, and to ensure security, the company sins long-term contracts. The suppliers, in general, do not have power over the company. For example, sugar is bought through quota by the price quoted by European Unions.

Bargaining power of customers- the products in impulse goods are sold to customers via several outlets like food and entertainment venues. The sales are made in huge numbers, and therefore no single customer can influence this company. Although with rising health awareness, the company should understand the customers’ needs and come up with better products.

Rivalry among existing competitors- several competitors are almost the same size as this company. Some are regional, national, and multinational; these competitors enhance brand recognition through promotional programs, new packaging, and extensive advertisements.

Threats to new entrants- a new entry in 2007 in the chocolate confectionery. Consumers upgrading from sugar confectionary to chocolate confectionery is rising affluence in India due to lower per capita consumptions of chocolate products. New entrants also help capture new growth; foreign brands invade the market (Bhanot, 2012). Hence, many consumers shift from local brands to foreign brands. Although the opportunities of new entrants remain high, it is hard to take over the market for a completely new brand.

The threat of substitutes- the image of chocolates made by Cadbury reveals a sweet dish that can be used on occasions involving happiness. Other competitors like Mithai, which are purchased Indian sweets, are prepared for the same purpose, although they are not the same as chocolates. Therefore, substitutes are pretty many and act as a potent force.

Segmentation Analysis

The segmentation of products in this company depends on a behavioral mix of demographics and psychographic factors, for example, based on occasions and income. Every person enjoys Cadbury regardless of their age and demography. The offerings of these products are dependent on the prices of the packs, designs of the packagings, storage facilities, and the production capacity (Jha et al., 2017). Although Cadbury has indeed targeted all age groups, it has distinguished the offerings of its products to a particular class of consumers. For example, Bourneville and Cadbury Temptations are meant for those consumers who will pay more. In contrast, another flavor, Cadbury SILK, is meant for those who have an irresistible liking for chocolate. Therefore, the product has put itself in a position as a symbol of good times and is meant for those moments that are special and real.

Cadbury Breakdown in India’s Offerings according to Ages

Age

Product Offerings

Kids

5 star, Bournvita, Fuse, Tang

Millenials

Celebrations, Ice creams, Silk

Adults

Temptation, Bournville, Ice creams, and Celebrations

Macro and Micro Analysis Summary

The microanalysis of Cadbury relating to the rivalry between the existing sellers in the market represents terms of opportunities and threats for the company. This is true because companies, for example, Hershey’s and Nestle, are Cadbury’s main rivals in the market. They have well-established brands just like Cadbury; hence they stand a chance to develop new promotions and new ranges of products. Rivalries will always continue among the said companies because they aim to reach out to more people, hence continued competition (Jha et al., 2017). All the porters’ five analyses show how constant threats and opportunities surround the company.

Cadbury has its strengths and the main one being the ability to have high manufacturing competency and their brand name, which is well established. It is the leader of innovation; hence many people support the brand because they trust it. Cadbury has a complete understanding of the segments of its consumers, which is why it can channel most of its efforts and resources in this sector. The ability to respond to the needs of the market and the solid ethical approach gives the company good recognition. Cadbury has had its growth in emerging markets, for example, in India.

Concerning the macro analysis of Cadbury on environmental issues, Cadbury needs to seem like it takes care of the environment. Other companies, for example, Fry and Rowntree, began making pure products hence creating competition with Cadbury, which is why it is no longer a pull in the advertising campaigns of Cadbury. The government put regulations on healthy eating; therefore, people should not buy confectionery products. There were job losses that made the employees damage the image of this company that they had built for so many years. There was a foreign take over which was hostile due to the new rules and regulations that had been made, which were more strict (NAGAR et al., 2021). Taxes increased, and hence those consumers with less disposable income plus the sales of a stock decreased. The taxes on transport due to fuel prices also rose, production of materials increased its cost. Thus, the pound in United Kindom devalued the company, and it was bought much less than what it was worth. This means that the macro aspects like the political aspect would have the company identify threats and opportunities. Taxes increase can lead to decreased sales, hence reducing profits; therefore, the supply of chocolates becomes low. Although the government is still pushing for healthy eating practices, Cadbury should identify this threat and act accordingly so that their profits may not be affected. Maximizing the opportunities will be a good strategy for this company.

Recommendations

There are a few strategic suggestions on what the Cadbury Company should implement to promote their products internationally. This is because it starts in the French market and its products are not popular internationally. To begin with, the company should improve France’s involvement through pound campaigns aimed at launching time out in France like it has been done in America. Using its genius marketing strategies, the company should therefore promote its products in the whole world, globally in the emerging markets (NAGAR et al., 2021). The third recommendation is that Cadbury should expand the variety of its products, for example, by setting a new line of non-chocolate candies. This will make it have more profits. Finally, Cadbury setting up an expertise market would be a great strategy if possible. For instance, selling Gourmet Line via the internet would produce new low-calorie or sugar-free products. If these products were generated, information flow between development and research facilities would have been coordinated.

SWOT Analysis

This analysis will help the company to develop various strategies to seize various opportunities available for growth. It also provides strategies for the firm to avoid threats that might affect its revenues.

Strengths

· Since it is the second most famous producer of chocolate, it is internationally acclaimed. Cadbury is a famous brand due to the production and distribution strategies that are naturally effective (HIDIRO?LU, 2019).

· It has a deep understanding of the customers’ needs, making it the leading brand.

· Through self-adjustments, it has been successful in the conditions of the ever-changing markets.

· Dairy milk is the most sold chocolate hence a major contributing factor to the sale of Cadbury.

Weaknesses

· For example, the other competitors, Nestle, have a wide variety of product portfolios, whereas, on the other hand, Cadbury relies only on the sale of confectionaries. This means that these competitors gain high profits from their other industry sectors (HIDIRO?LU, 2019).

· Although it is regarded as the most popular brand, Cadbury lacks international exposure. It may take some time before being accustomed to the market conditions in America.

Threats

· Very stiff competition between the competing brands to remain as the best brand. These competitions have often led to price alterations by the competitors hence a constant war in the prices of these products.

· Increase in demand for cost environment, for example, sugar, packaging, and supply chains in low-cost and transport locations (HIDIRO?LU, 2019).

· Many social concerns increase consumers’ obsession with calorie counts and obese people. The health and nutritional value of the customers are in most cases compromised given tastes.

Opportunities

· There are always opportunities in the market concerning acquisition to increase its shares. This is because the confectionery market has a characteristic of mergers and acquisitions, as seen in the markets.

· The company opportunities are visible in large countries and developing and developed countries, such as China and Russia, where their populations rise. With the income increasing, the purchasing power of these consumers increases, and the demand for candy increases (HIDIRO?LU, 2019).

· The efficiency programs and the level of growth of the Cadbury company help bring in high saving costs in the firm. Cadbury has a healthy thought of actions in matters relating to Research and development.

· To maintain a front-runner in the market, innovation is critical, hence in this case, considering consumers’ health. Hence Cadbury should seek to have sugar-free products because of the constant demand for natural, low-fat confectionary.

New Marketing Ideas

Although it faces various threats in its activities, Cadbury Company continues to grow and make developments. Opportunities are also available responding to the target market and the marketing activities best suited to reaching out to the intended audience. There is the foremost opportunity that the company could have its business developed to target those markets in Russia, Nigeria, and China. These three countries are known for their large populations, and they are still growing. There could be an increased market for confectionery because the demand is high as the population increases. The company co-branding with other brand industries is another excellent marketing idea. This would help in capitalizing on more advertising opportunities.