Microeconomics - Cadbury Study

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Foundations of Economics for Business
Coursework

Cadbury Limited

BSc. Management
November 2012

Word count: 1925

Table of contents:
Introduction
Short history of the company
The confectionery market and Cadbury's place in it
Competitors
Products
Downsizes
Fairtrade
Advertising
Success on the market and market strategies
Conclusion
Reference list

1. Introduction

This is an analysis of the company Cadbury Limited and its impact on the confectionery market, which will focus on what forces have grown this company, its development, products and competitors, and how it has achieved its success.

2. Short history of the company

The name of Cadbury had first made its appearance in 1824, when John Cadbury opened a shop on Bull Street nr. 93, Birmingham, which sold cocoa and drinking chocolate. In 1831 he opened a factory and started producing drinking chocolate and by 1842 he was selling 11 types of cocoa and 16 types of drinking chocolate. The year 1847 was a breakthrough, as it was the year when the first chocolate bar was produced. (Cadbury, 2012) From then to this day, the company has expanded to become one of the top confectionery companies in the world. (Alibaba, 2010) Other milestones were achieved in 1866, when the Cadbury brothers, John's sons, launched “Cadbury Cocoa Essence”, UK's first unadulterated cocoa, which helped increase sale dramatically. (Cadbury, 2012) Then in 1875 came the first milk chocolate bar, and year 1905 marked the beginning of the famous Dairy Milk brand. In year 1920 the trademark purple color packaging of Cadbury chocolate was introduced and in 1928 the “glass and a half” symbol was used. (Cadbury, 2012) In 1969 Cadbury merged with Schweppes, and by the time Cadbury World opened in 1990, the brand had become popular worldwide, with a large range of products to offer for consumption. (Cadbury, 2012) In 2008 Schweppes and Cadbury demerged and in 2010 Cadbury became part of Kraft foods, now known as Mondelēz International Inc. (Cadbury, 2012)

3. The confectionery market and Cadbury's place in it

Cadbury is part of the global confectionery market, which resemblances a monopolistic competition and is “large, growing and has attractive dynamics. The global confectionery market is the world's four largest packaged food market.” (Manohar Prasad, 2011) A large category of the market is made of chocolate, also the largest segment of Cadbury's production and it accounts “for over half of the global confectionery market by value.” (Manohar Prasad, 2011) Cadbury is also the “largest global confectionery supplier, with 9.9% of global maket share.” (Manohar Prasad, 2011) The market of confectionery has been evaluated at £5.41bn in 2011, after a 7.5% growth since the previous year. The chocolate sector was estimated to account for 74% of the market's value, while the sub-sector with the biggest growth was the one of boxed chocolates and sharing bags. It is said the reason behind this is the continual saving because of the economic crisis, which has increased demand for those products. As a result, the manufacturers, including Cadbury, are introducing more variations of these products, instead of adding “new products in an already saturated market.” (Key Note, 2012) The market is also expanding on-line, with the option of purchasing the merchandise off the internet and also because of the “interactive online campaigns and manufacturers' use of phone 'apps'” (Key Note, 2012), which adds a new angle to the market. „Although the confectionery industry is doing well overall, there are certain points of concern. Premium brands are struggling to cope with the economic crisis.” (Key Note, 2012) Because of this, it is farely hard to be a newcomer in the market at this time, considering that brands which already have customer fidelity are struggling. Cadbury accounted for 15% of the manufactuing of consumer chocolate in 2003, as shown in the...
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