Case Study — Marketing Strategy: Mondelez International

Summary:

Mondelez International is a global snack-foods company, offering leading brands of cookies, crackers, chocolates, gums, and candies in 170 countries. The company was formed in the October 2012 corporate breakup of Kraft Foods.

It covers following brands/ titles in India:

1. Cadbury Bournvita

2. Cadbury Celebrations

3. Cadbury Celebrations

4. Cadbury Dairy milk

5. Choclairs

6. Gems

7. Halls

8. Perk

9. Tang

They market as:

Purpose : “empower people to snack right”

Mission: “Lead the future of snacking around the world by offering the right snack for the right moment made the right way”.

Three priorities:

1. Accelerate Consumer Centric Growth
2. Drive Operational Excellence,
3. Building a winning growth culture.

Along with this:

They claim that they have the scale and resources of a global powerhouse with the support of speed, creativity and agility of a fresh new start-up. After departure from Kraft industries they grew very fast and along with that they were keenly looking for something out of the box and something creative.

Once they got established they shift their focus from creativity to Quality .Along with this in order to create a brand value they started the social responsibility.. They also succeeded in doing so. Calling in India they focuses on

• Sustainability,
• Mindful Snacking,
• Communities,
• Safety

Market Analysis :

Mondelezs’ Cadbury is the world’s best-recognized confectionery brand. With a wide range of chocolate bars and other Confectionery products like milk powder, nuts etc. in its product range and a geographical presence spanning Europe, Australian, and India, the company is extremely well established. As a result, you might think Cadbury is here to stay for good. Let’s see further ahead in this article which reviews the Strengths, Weaknesses, Opportunities, and Threats for the Cadbury and its products.

A.) Strength of the Brand :

As a parent of one of the world’s leading confectionery companies, Mondelez has an extremely powerful brand. Consumers across the globe have come to associate its name with a specific taste, meaning that they know exactly what to expect when picking a Cadbury and it’s related product off the shelves. The value of a strong brand cannot be understated, especially in a market where quality is so important.

Featuring numerous other brands with household names, Mondelez International drives over $26 billion a year in revenue. These impressive revenue statistics ultimately result in large profits, which can be reinvested into any of the company’s subsidiaries.

The confectionery giant operates in over 50 countries with a universally positive reputation, as shown in the PEST analysis of Cadbury & Oreo. This global presence not only drives additional revenue but also acts as an insurance policy for the company: if one country were to implement unfavorable regulation, Mondelezs’ subproducts would still be able to drive revenue across the remaining markets.

B.) Weakness of Brand :

There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market. Organization structure is only compatible with present business models thus limiting expansion in adjacent product segments. Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.

Another weakness Mendelezs’ products have battled is that of product recalls. In recent years, the company has had to recall a portion of its confectionery products on numerous occasions. These recalls have had varying causes: in one case, products containing nut residues were labeled allergen-free, while in another case, products were believed to have contained harmful bacteria. Product recalls of this nature can easily tarnish a brand’s reputation.

c.) Opportunities for the Brand :

The new technology provides an opportunity to Mondelez International to practice differentiated pricing strategies in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions. Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in the bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Mondelez International in other product categories.

Perhaps Cadbury’s biggest Opportunity is that of emerging markets. Historically, regions such as Far East Asia and Africa have not been significant consumers of conventional, Western confectionery — as offered by Cadbury. However, with the widespread effects of globalization and growing consumer incomes, it’s more and more likely that Western food brands will be able to expand into these previously untapped markets. Of course, this presents an additional revenue stream.

D.) Threats for the Brand :

Perhaps the scariest threat for a confectionery company like Cadbury is that of consumers’ growing health consciousness. With the rapid advance of science, consumers have recently come to learn a great deal about what it means to be healthy (or unhealthy). Unfortunately, numerous studies have proven the negative health effects of sweet, processed foods such as chocolate. As consumer preferences shift due to health consciousness, this might mean a serious decline in revenue for Cadbury.

A number of countries have proposed implementing a sugar tax — an additional charge on sugary products designed to curb consumption. The idea has gained significant traction in some European countries; most notably, Norway has had a longstanding sugar tax which encourages individuals to buy confectionery abroad or in duty-free zones. If such a sugar tax were to be implemented in new areas, it would increase the end cost of confectionery for consumers, thereby thwarting sales volume and thus revenue for Mondelez and its subsidiaries.

Four Ps of marketing Strategy:

We first find answers to these questions and then proceed to set 4Ps

• What do consumers want from your product or service?

As the company targets best snacks for best times. After studying the adds of Cadbury we can for sure say that it focuses more on serving products for different range of moments. So customers just want more products to enjoy all moments and to serve all age persons. The perk brand of it was launched in order to serve some lite snack to just munch for the time.

• How does your product meet those needs?

The company runs a large Research and development department and funds it as far as possible to search for newer developments and their marketing team also works harder to fetch feedback. It sponsors in fests and organize small events to gather the feedback from the target audience of their products .

• How do you differentiate yourself from your competitors?

Cadbury is good at marketing products .

Its portfolio is a huge display. The pricing is from 5–160 INR .The rates are according to weights and quality and viscosity of chocolate. Along with this the advertisements from dairy milk are targeted to that audience who are potential buyers of that product, like Cadbury fuse is marketed as a snack bar not chocolate, chocolate premium and celebrations are marketed as products that can be gifted on right occasions.

Along with these plus points they have an amazing packaging that makes it a good product to consume in public places in front of friends or also share with them. Also they have good brand Ambassadors who have a good social image and have a good fan following.

4 P’s of the Brand :

A . ) Product:

International sells its products under 5 broad categories, and each of these serves as separate product lines. All of its products are sold under the brand name of Mondelez International. It sells products that are highly differentiated, with various features offered to customers that competitors don’t offer. Its products are therefore considered to be unique.

Its products are perceived to be of higher quality than that of competitors. The milk content in this is higher than its competitors. The major components in the products are mainly sugar, cocoa butter, vegetable fats, cocoa mass and emulsifiers. Therefore, customers are willing to pay a higher price for these. It sells products that are famous for its traditional design that is also practical for customers to use. The design of chocolate is nearly the same in all parts of the world.

It follows a flexible Clean Development Mechanism (CDM) product life cycle.

B. ) Price :

The current pricing strategy to set the price level that Mondelez International follows is a competitive based pricing strategy. This is because the data on competitors is easily available due to a large number of competitors that exist within the industry. It also takes costs into consideration to set prices for a few products for which either information is not available on competitors, or are costlier to make.

It currently uses product bundle pricing as well, where products are bundled together and sold at prices lower than the total of individual items. It also uses an optional product pricing strategy for certain products, where it offers a price for the base product and separate prices for the accessories that come along with it. Mondelez International has fixed the prices of the final product. Channel members; retailers and wholesalers, buy the product at a lower price and earn through their own margins.

Their margins may vary as the final price is the same all over the country .

The premium pricing for a different set of products makes it a special competitor and helps to capture a large market share.

C.) Place :

Mondelez International sells its products through two marketing channels. The first is where it sells directly to its customer through its online website. The second is where it sells to wholesalers who then sell to different retailers located all over the country. These then sell to its customers. It has its products present on over 500 retailers throughout the country. It follows an intensive marketing strategy where it tries to include its products on as many retailers as possible. This ensures that its products are available to customers easily in different parts of the country.

It follows an omni-channel distribution system where it has integrated its online and offline stores to allow customers easy access to its products. It has a network of over 500 suppliers that provide it with the raw materials needed for production. It has developed a close working relationship with its suppliers allowing the company to work with them to innovate and introduce new and attractive features on its products.

5 company based manufacturing services include : Thane, Pune, Gwalior, Bangalore, Himachal Pradesh

4 sales office include: New Delhi, Mumbai ,Kolkata ,Chennai

D.) Promotions :

Mondelez International uses multiple media channels to promote its products. It uses traditional media, which includes an advertisement on television and radio. This is beneficial due to its large reach and ability to attract a large number of people. It uses online and social media advertising, which is cheaper and beneficial due to the increasing usage of the internet.

Cadbury spends approx. 45 crore on advertising. They target on increasing Brand loyalty ,encourage repeat purchases and at the same time increase market share

It advertises on various social media platforms with a focus on YouTube, Facebook and Twitter due to the high monthly usage of these. It has over one hundred thousand likes or customers following on these pages, which are exposed to frequent content uploaded by Mondelez International. It uses a percentage of sales method to determine the promotions budget for the year.

Market Analysis of Mondelez International

Strategy development requires a comprehensive market analysis. It can be done by quantitatively and qualitatively assessing the customer market. The information obtained from the market surveys will help Mondelez International Inc management in identifying the emerging opportunities, exposing the potential threats and understanding how they relate to the company’s major strengths and weaknesses.

1. Mondelez International Inc should evaluate the market potential and volume to determine the size. The market potential includes potential customers and considers the upper demand limit. The market volume includes certain indicators like realized sales and total turnover. Mondelez International Inc can take information from different sources to accurately determine the market size, such as- financial data of industry’s major players, government data, customer surveys, published industry reports and trade association data.
2. It is important to analyze the emerging market trends, particularly when environmental turbulence is high. Mondelez International Inc can use different trend analysis techniques for this purpose, such as- marketing mix modelling, risk analysis, choice modelling and customer analysis. Mondelez International Inc should also monitor the political, legal, regulatory, social and economic changes as these environmental forces play an important role in shaping the market trends.
3. Mondelez International Inc can use Porter’s five force framework to determine market profitability. The high buyer power will negatively affect market profitability, showing Mondelez International Inc S customers have different options. Low supplier power positively influences profitability and indicates Mondelez International Inc has a strong position during the negotiation process with suppliers. High entry barriers show that there will be lesser new entrants in the market. High substitute product threat and high competitive rivalry will also decrease the market profitability and attractiveness for Mondelez International Inc.

Marketing Strategy:

If we follow a proper chain of processes than we can count Mondelez as a corporate and following are its SBUs

1. Beverages
2. Biscuits and cookies
3. Chocolate
4. Gum and candy
5. Meals

After having this much of a cycle we are mainly focusing on Cadbury as our product. Following data on STP will assist the company to assign resources to our targeted product.

“To provide our customers with a tempting and exquisite taste”

This is the mission statement of Cadbury which has a focus on taste.

According to a research by mintel there is INR 156 billion of market in India and Cadbury accounts for nearly 40 percent of this market. So we can say that Cadbury must be provided a near of 60 billion INR of total assets as it can expect a total of 3.26 billion INR profit on this as per details of FYI 2018.

Then comes the segmentation:

The production units of the brand are in New Delhi, Mumbai , Kolkata, and Chennai.

But in order to satisfy the demographics of social class it already provides a set of products with different ranges to customers. What new market we can propose is the 2 tier cities where there are outlets but the whole range of Cadbury can’t bee find in a single place. What company should do is open its outlets so that a customer can find all products in a single place and avoid alternatives.

In terms of geography , in years 2016 growth of company was staggering and that time it expanded in rural regions of 9 states where they gut success and now have a proper channel of delivery in whole India. But due to less consumption in West India and South India it mainly focuses in northern and central India but continues to deliver in all parts of India.

The measurability of lifestyle segment is nicely calculated by company in terms of offerings for working class. Figure for working class in India can be fetched from anywhere and this segment is targeted by company by providing a good range of gift items that can be exchanged between colleagues and it is sustainable too.

Targeting:

As we all know chocolate is a thing consumed by everyone. So counting on age and gender won’t be giving any benefit as rifle approach is not followed by company. Shotgun approach is best suited for scenario.

Positioning:

As it says in its motto “taste of real life” it works on taste attribute of chocolate .And it has followed a kind of latent marketing strategy in its early stages where it has made peoples habituated to their products so when competitors entered in market it was nearly a monopoly of this brand that didn't got hampered. Also it has worked on Nazi's phenomenon of propaganda that is display adds all time so that consume has a memory cue with him all the time.

From the propaganda of its parent company it derives following points of Parity:

1. Strong global presence
2. Powerful global Brands and local jewels
3. Committed peoples
4. Strong value chain

And following are Points of Difference for there brand:

1. 100% cocoa brands
2. 100% RSPO coverage maintained
3. 100% packaging recycle ready
4. And their taste.

Using a proper mix of these makes the brand available to all but what this can do more is make the product more price friendly to make a distinguished place in the market.

References :

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