University of Innsbruck – School of Management
Cadbury’s Relaunch of Caramel and Wispa
Course No.:436.222 (VU)
Wid Maximilian, Wolff Laura, Wolf Robert, Zanon Johanna
Cadbury Plc. is a multinational confectionery (chocolate, chewing gum and candy) company which was founded in 1824 by John Cadbury. In the first years, a time when only wealthy people could afford its products, Cadbury only sold cocoa and chocolate. After World War I, Cadbury started its mass production of chocolate and later was consequently enlarging the company’s capabilities and portfolio via acquisitions and the creation of further products and stand-alone brands. In 2003, Cadbury made a momentous strategic marketing decision, namely to establish Dairy Milk as the Megabrand of the company, inhering, besides others, the two famous and former stand-alone brands Caramel and Wispa. Wispa consumers were longing for the chocolate bar in its traditional way and therefore protested through different social media. The management was forced to re-launch the bar; with tremendous success.
Situation and problems
Cadbury’s brands evolved out of a long company history and through several global, regional and local adaptations. The year 2003, when Todd Stitzer became new CEO, was a year of change for Cadbury. Through synergies, the structure was simplified and management capabilities were improved in order to reduce costs and increase margins. Declining sales of Wispa and Caramel were the main reason for the company to include, beside others, these two brands in Dairy Milk, in order to make a Megabrand out of it. Prior field tests indicated that consumers would accept and continue buying both Dairy Milk products and therefore confirmed this management decision. Nevertheless, due to the loyal and big customer base of Wispa and Caramel, reactions showed that – at least concerning Wispa - this decision was inaccurate. Now the question arises, if Cadbury should also re-launch the Caramel bar as a stand-alone brand or should it continue having it incorporated in the Dairy Milk range. Furthermore and more generally, it is debatable how the firm should manage its brand architecture and branding strategy in future and how it should illustrate its products concerning packaging and advertising in order to expand market shares of the chocolate-, candy- and chewing gum market. These factors are essential, because the importance of powerful brands, packaging and advertising are strongly valued and influencing the company’s growth. The Confectionery Market
The relationship of a company’s products with the market influences its brand architecture. In Cadbury’s the target market has relatively homogenous needs and interests (a research from Cadbury itself has shown, that confectionary is a part of everyday life). Additionally, due to growing globalization, media habits of confectionery consumers tend to assimilate more and more. To reach a relatively homogenous target market, global corporate-dominant branding is most effective, because a wide market is appealed. In addition to that, the degree of market integration is rather high. Integrated markets mean that customers with similar purchase needs worldwide and the same or similar competitors (for example Mars Inc.) are present in different regions. Nevertheless there are also smaller local competitors in the confectionery market. When markets are relatively integrated, but still local competitors exist, a combination of corporate- and product brands is useful. Cultural embeddedness is also a crucial factor for branding strategies. As already mentioned, confectionery consumers have relatively similar needs, but it is also the case that consumption preferences for confectionery can be embedded in local cultures, meaning preferences of taste. Therefore Cadbury should also consider cultural differences concerning its brands. As the...