Market Structure and Competition

India’s chocolate market is estimated at around Rs. 3,000 crore and the overall chocolate market is growing at 15% a year. According to TechSci Research, India’s chocolate market is expected to reach $3.2 billion by the year 2018. To be a long-term market leader is the goal of any marketer. Cadbury has more than achieved this goal in India with a market share of over 70% in the Indian chocolate industry. Cadbury chocolates’ major competition comes from Nestle, Amul, Campco and international brands like Mars and Ferrero. Despite this tough competitive market Cadbury is able to maintain its position as the market leader by new-product introductions, distribution strategies and intensive promotional activities.

Cadbury Dairy Milk is considered the ‘gold standard’ for chocolate in India. Cadbury has successfully penetrated all demographics in India which its competitors have not been able to achieve. It penetrated the rural market with the option of a Rs. 5 dairy milk chocolate. None of its competitors provide such an option. To compete with Cadbury chocolates the other brands need to provide “more for less”.

Now that Cadbury already has a majority market share it needs to focus on expanding total market demand. During the 1990s, Cadbury had a higher market share; however the entry of competitor Nestle forced Cadbury to extend its target market to include not only children but also adults. This strategy proved to be successful because Indian consumers were already familiar with the brand name and it was therefore not difficult for Cadbury to extend its target market.

Protecting the market share was another challenge for Cadbury chocolates. It used proactive marketing schemes. Cadbury has a history of coming up with memorable campaigns like Kid in all of us, Real taste of life, Kuch khaas hai zindagi mein, No umar for laalach, Pappu pass ho gaya and Kuch meetha ho jaye. The only competitor that has ever come close to creating as much hype from a campaign would be Amul with its “Tate of India” tagline, but then that was for all Amul products and not just its chocolates.

‘Kuch meetha Ho Jaye!’ (Let’s have something sweet) was a major success with Indian consumers, who associated Cadbury Dairy Milk with celebratory occasions. Campaigns are simple and very relevant to Indian themes. Cadbury understands that India is a country where many festive events such as Eid and Diwali take place; the company’s adverts engage the consumer by showing families celebrating whilst eating Cadbury’s chocolate, this almost gives the impression that Cadbury is an Indian company and cements its reputation as the gold standard for chocolate in the country. Cadbury has connected well with the Indian audience and formed a strong, loyal consumer base.

For Cadbury, threat of a substitute product is moderate while threat from a new entrant is considerably low considering its market position. Moreover, Cadbury was aware that a large number of consumers were still choosing traditional Indian sweets (mithai/ladoo) over chocolate. The company therefore launched Cadbury Dairy Milk Shots in 2008. The shape of these chocolates resembled traditional Indian sweets and was positioned in the market as ‘chocolate ladoo’.

Cadbury realizes the importance of new-product activity in the market and has therefore successfully launched its products like Bournville, Silk and Shots. This is one of the weaknesses that its competitors have, that they do not focus on developing new variants to increase their market share.

Weaknesses of Competitors:

Amul

• Low market share in chocolates segment.
• Strong competition from International Markets.

Nestle

• Inability to provide consistent quality in food products
• Weak Implementation of Customer Service Relationship
• Complex supply chain management

Mars

• Expensive chocolates
• Not easily available

Being a market leader is not that easy too. It was recently alleged Cadbury chocolates abused its dominant position by imposing unfair terms in their dealership agreement. After looking into the matter, the Competition Commission of India (CCI) decided to reject the complaint saying that there is no violation of fair trade norms.