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Introduction

The chocolate industry consists of establishments mainly engaged in manufacturing

confectionery, chocolate or cocoa products, with or without sugar. Chocolate is
produced from roasted ground cacao beans that are combined with other ingredients
like milk and sugar. Cocoa is a po wder produced from cocoa seeds that have been
roasted, shelled, and ground.

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The Indian market is thought to be worth some 15bn rupee and has been hailed as
offering great potential for Western chocolate manufacturers as the market is still in
its early stages.

Chocolate consumption is gaining popular ity in the country due to increasing

prosperity coupled with a shift in food habits Indian chocolate demand fuels domestic
cocoa increases.

 


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Chocolate, that earlier used to be a delicacy, has started taking the place of
traditional sweets. Confectionery makers are expanding their product ranges in India,
based on recognition of the country¶s huge growth potential for chocolate products
and sweets and relative insulati on from the global recession, according to a Data
monitor review of the market.

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Chocolate product variations

Product Variation

Segment Share (%)

Moulded Chocolates 50

Count line bars 33

Sugar panned 13

Choco panned 4
îakery and confectionery segment, Ministry of food processing industry MOFPI,
http://mofpi.nic.in , (accessed on 14 Nov 2010)

INDUSTRY OVERVIEW

The chocolate industry is among the fastest growing fmcg industries in India though
it occupies a relatively low %age of the total fmcg market.

The Indian chocolate and confectionary industry has various players in the market
but is pretty much dominated by the multinational companies like Cadbury¶s Indiaand
NestleIndia.

Cadbury is the largest confectioner in the country, with Nestlé a distant number two.

Sweet Surrender: Can Kraft's Cadbury Acquisition Help It Tap the Indian
Market?Published: February 25, 2010 in India
Knowledge@Whartonhttp://knowledge.wharton.upenn.edu/india/article.cfm?articleid
=4451 14 Nov 2010

Indian domestic brand Amul is the third in line.Cadbury¶s is the market leader with
70% of the market share, second is Nestle with a market share of 26% and Amul
comprises the rest of the market along with a few other domestic players.

The global chocolate market is worth $77 billion. The Chocolate market in India is
estimated to be around 1500 cro res growing at 18-20% per annum.

The chocolate market in India is a niche market penetrated largely in urban areas
and per capita consumption is low as compared to those in developed countries of
the West.

The per capita consumption of confectionery in India is just 54 grams, a miniscule

amount compared with average 11 kg consumption in the developed markets like
Europe.

Sweet Deal: îitter competition among confectionery majors 8 Aug, 2010, 03.22AM
IST, Monica îehura,EThttp://economictimes.indiatimes.com10 n0v 2010

Although there a few players in the Indian chocolate industry, the focus of this
assignment is on Cadbury¶s and Nestle.
 OVERVIEW OF THE COMPANIES

CADîURY¶S

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft
Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick
meals.

With annual revenues of approximately $50 billion, the combined company is the
world's second largest food company, making delicious products for billions of
consumers in more than 160 countries.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60

years of existence, it today has five company-owned manufacturing facilities at
Thane, Induri (Pune) and Malanpur (Gwalior), îangalore and îaddi (Himachal
Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The
corporate office is in Mumbai.

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 Cadbury has maintained its undisputed leadership over the
years. Cadbury brands such as Dairy Milk, 5 Star, Perk, Eclairs and malted milk
additive îournvita have helped it command some 70% of India's US$425 million
chocolate market, and 30% of the US$1 bil lion sugar boiled confectionery category,
according to marketing research firm ACNielsen.

Sweet Surrender: Can Kraft's Cadbury Acquisition Help It Tap the Indian
Market?Published: February 25, 2010 in India
Knowledge@Whartonhttp://knowledge.wharton.upenn.edu/india/article.cfm?articleid
=4451,10 Nov 2010.

The chocolate confectionary segment comprises of following brands:

Cadburys dairy milk and variants like roast almond, fruit and nut and crackle ,
Cadburys silk , Cadbury¶s îourneville

5- Star and 5 star crunchy

Perk

Celebrations

Temptations with flavour variants like Roast Almond Coffee, Honey Apricot, Mint
Crunch, îlack Forest and Old Jamaica

Éclairs, éclairs crunch

Gems

NESTLE:

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With seven factories and a
large number of co-packers, Nestlé India is a vibrant Company that provides
consumers in India with products of global standard s and is committed to long-term
sustainable growth and shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business
and expects the same in its relationships. This has earned it the trust and respect of
every strata of society that it comes in contact with and is acknowledged amongst
India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.

Nestlé¶s relationship with India dates back to 1912, when it began trading as The
Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and
selling finished products in the Indian market.

It produces various brands namely

• Milk products and Nutrition

• Cooking and Prepared dishes
• îeverages
• Chocolates and Confectionary

http://www.nestle.in , 10 Nov 2010

The chocolate and confectionary brands are

Nestle Kit±Kat, Kit Kat crunchy,

Nestle milk chocolate,

Nestle munch, munch pop- choc,

Nestle bar-one,

Nestle éclairs, nestle milky bar éclairs,

Nestle milky bar wafer.

CUSTOMER PERCEIVED VALUE

DEFINITION

Perceived value is the consumer¶s overall assessment of the utility of the product on
perceptions of what is received and what is given.

Value represents a trade -off of the salient give and gets components.

Source Zeithaml, V.A, 1998. Consumer perceptions of Price, Quality and Value: A
means ±End model and synthesis of evidence. Journal of marketing 52(July): 2 -22

Customer perceived value = Total customer benefitsTotal customer

cost

Total customer benefits: Perceived monetary value of the bundle of

economic, functional and psychological benefits customers expect from the market
offering because of the products , services, personnel and image involved.

Total customer cost: Perceived bundle of costs customers expect to incur

in evaluating, using and disposing of the given market offering including monetary,
time, energy and psychological costs.

Marketing Management- A south Asian perspective, Philip Kotler , Kevin lane Keller,
Abraham Koshy, MithileshwarJha, 13th edition,2009,Pearson Education, Inc. p 117

CPV OF CADBURYS CHOCOLATES

Value can different for different consumers .

According to Holbrook¶s definition consumer value is an interactive rel ativistic

preference experience.

Interactive: Interaction between some subject (consumer) and some object (product)
Relativistic:

• comparative (involving preference among objects)

• personal(varying across people )
• situational(specific to the context)

Preferential:Embodies a preference

Experience: Resides in the consumption experience


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In case of Cadbury¶s chocolates the value resides mostly in preference and

experience.

Chocolate buying decision is uniquely emotional and personal in nature.îuying is

done more on the basis of what a person wants than what the person needs.

A common man has a very strong perception of Cadburys chocolates. The

reason can be many some of which are described below:

• Taste

• Price

• îrand image

• Advertising

• Availability

• Range

Taste/quality:

As understood, chocolate buying is a very emotional decision. A person likes to buy

a bar of chocolate for its great taste and flavour .Cadburys is considered to be a gold
standard of chocolates in India. Cadbury¶s has a long standing presence in the
Indian chocolate market and its name is synonymous with chocolate India.
Cadbury Dairy Milk is their ³Gold Standard´ for chocolate, where the ³pure taste of
Cadbury Dairy Milk defines the chocolate taste for the Indian consumer´ (Cadbury
India Ltd., 2008).

Taking a closer look

Price

Value for certain customers is price. If a bar of Cadbury¶s chocolate is sold at a low
price compared to others it would have a greater perceived value. Pricing is not a big
area of concern in the urban areas but in the rural areas where the market is much
wider, low priced chocolate would have a deeper penetration.

Cadbury¶s has launched a number of low price pa cks of its various brands like Perk,
5-star to lure the rural population as well as the ordinary middle class.

Brand image and Advertising

A strong brand image also increases the perceived value of Cadbury¶s. For a
common man chocolate is synonymous with Cadbury¶s.

Advertising plays a pivotal role in defining a customer perceived value. Cadbury¶s

has always been a very strong brand in the c hocolate segment, with their innovative
and creative ad campaign¶s they strengthen their base every time .

Availability

Availability of any product is

CUSTOMER VALUE HEIRARCHY MODEL FOR CADBURY¶S CHOCOLATE

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