Chocolate market: Principal Competitors and how they achieve competitive advantage
Chocolates are often referred to as feel-good foods. They are considered to be part of life’s simple luxuries. There are many chocolate industries especially in the USA and UK and this makes the chocolate market to be characterized with stiff competition among the manufactures of the chocolate, biscuits and the whole of the confectionary industry. To survive in the competitive confectionary market, each industry has devised strategies that can enable it to have a competitive advantage over the others. Through the strategies, each of the industry aims at dominating the chocolate market by securing and maintaining many customers. To realize this, the industries have dealt with the procedures of manufacturing, such as selecting high quality of cocoa beans, to produce the best products. Usually chocolates are processed from the cocoa beans. With effective manufacturing and marketing strategies, the chocolate industry can attain a competitive advantage in the chocolate market. This paper therefore looks into the principles and practices and the marketing strategies used by various chocolate industries to differentiate their brands and hence attain the market competitive advantage (Armstrong & Kotler, 2009).
In the chocolate market, there are three major competitors; these being Cadbury, Mars and Nestle. Generally, these industries use different brands with specific features in order to out do each other. They have dealt with the colors of their products some which have different implications. They are seen to consider demographic patterns of the society, that is, they produce their products some of which are targeting particular groups of the society, for instance women, men or the youth. They also strategize on the promotional activities to make to create awareness of their products to as many people as possible. They implement strategic packaging in order to produce the effects required by the consumers. They have extended their market coverage in order to realize more customers. To specifically see how market competitive advantage can be achieved, it is better to look at how each of these industries strategizes its market operations (Armstrong & Kotler, 2009)
Cadbury is the one the largest chocolate producing companies in the world. Its brands are the Dairy milk, Twisted, Boost, Wispa, Decker, and Flake. To improve its consumer coverage the company has introduced 300 new commodities in the United Kingdom market. Cadbury uses the purple color to differentiate its products from others in the market. This color is also associated with royalty. Due to the use of the purple color, Cadbury was given a royal warrant in 1854 to supply the products to the queen of Victoria, whose favorite color was purple. This led to the Cadbury being associated with richness and indulgence.
The market coverage of Cadbury shows that it sells its products in 33 countries over the world and approximately 65% of the British purchase one or more daily milk in a year. This makes Cadbury to be a top brand in Britain. The great characteristic of the confectionary market is its seasonality. This means that most of the products are purchased most on some specific seasons such as Easter holidays and Christmas. Therefore at this time the packaging methods, boxed products, are made to be appealing as much as possible. For example, Cadbury produces some seasonal oriented products for the family cerebrations in the time of Christmas. An example is the chocolate bars enclosed in a silver casing. Improved packaging is done on the existing products to create more positive effects. Cadbury uses the strategy that the consumers who buy the product receive prizes including trips. For instance, those who were to buy the Cadbury’s egg twisted crème were to go to a space city in Russia to experience a zero gravity. Buyers could enter the prize draws through the codes printed on the packs. This is a promotional strategy because one had to buy the products in order to be able to enter into the draw.
To enhance its market coverage, Cadbury launched a new website known as dearcadury.com. This is a strategy intending to reach more customers such as educational institutions, consumers and employees. Results have shown that in the year 2008 the company’s business revenue had grown by 5% in the UK. This is attributed to the introduction of new brands and promoting existing products such as dairy milk, which was the leading in sales. When launching its products, Cadbury makes use of the television promotions extensively using as much as £2m. It normally does it in form of campaigns, for example, when launching its fruit and nut range to mark its 80th anniversary, Cadbury introduced two new flavors and campaigned for them with a banner labeled loving combinations. Re-launching its milk tray-boxed chocolate in April 2008, it targeted ladies between 35 and 45 years old. It also targeted men wanting gifts for their ladies. Cadbury reintroduced the chocolate brand wispa in 2008 making it to realize a sale of 20 million bars in a period of seven weeks. This resulted into the brand being reintroduced permanently (Armstrong & Kotler, 2009).
From the results obtained, Cadbury dairy milk is the sweetest chocolate present and sells more. This is due to its repackaging and re-launching. The company has built the brand and its extension techniques. The advantages involved include the building of awareness and thus increasing the prospects of buying at the spur of the moment. It also enhances the introduction of new products because the consumer already knows the main brand. The other advantage is that it leads to the realization of high sales thus maximizing the income (Stone & Jacobs, 2008).
Cadbury Company utilizes on-pack campaign in its products, more especially because it leads to increase in sales. Another strategy employed by the Cadbury Company includes the utilization of the many taxis in places like London, Edinburgh, and Birmingham among other places to promote the products. Promotion is also done to a large extent by other media such as the television advertisements, online and the press. All of the strategies discussed above enable the Cadbury Company to realize a competitive advantage over the other chocolate industries.
The other principal competitor is the Mars Company. This company is under the name Wrigley Candy UK. Its confectionery brands include the Mars bar, Milky Way, Snickers, Starburst, M&Ms and Twix. The principles of the company are five and they are quality, mutuality, responsibility, efficiency and freedom. The company defines quality as being their work and the value for money is the company’s goal. The customer is the boss. For the company, quality is measurable and has to meet the expectations of the customers. Talking of mutuality the company states that benefit shared is mutual and lasts. It describes the relationship everyone in the company desires to make in all the company’s business. The rewarding of loyal retailers and wholesalers of the Mars products is defined in the mutuality principle (Clark, 2009).
When dealing with responsibility, the company states that they have to deliver total responsibility and they being associates they assist others in their responsibilities. In the efficiency principle, the company aims at the use of resources fully without wasting anything. The company’s efficiency enables them to operate with minimum resources than any other company of its size. About freedom, the company states that they need freedom to form their future and it needs profit for it to stay free. The company has remained a family company and its private ownership is intentional to allow the company to enjoy its freedom. The principles are not just statements; they are basic beliefs that enable the company to have its identity (Eastman & Klein, 2008).
The company utilizes the repackaging strategy in order to meet the customer preferences. For instance in 2003, the company’s product, galaxy, is seen to have benefited from the repackaging. The new packaging of galaxy block chocolate enabled the company to realize an increase of 5% in the sales. The company also targets specific societal groups when promoting its products. For example the repackaging features included in the block chocolates, Mars incorporated features such as the conventional brown color, caramel, cream and a new logo to target the women.
In its process of promoting its products, Mars has extended its products brands. For example, the company extended the chocolate brand into ice-creams. This particularly proved to work well in the summer seasons as it led to more sales. It has designed almost all its products-galaxy, mars, snickers and bounty. This strategy is considered as being economical and builds and promotes the products significantly leading to a competitive advantage (Sandhusen, 2008).
In its pursuit of competitive advantage in the market, Mars has collaborated with the social network, face book, so as to enable the customers send virtual gifts to others which are then taken and exchanged for the real products. This is a strategy in that more people can be able to utilize the products even when they cannot buy the products themselves. Still in the same strategy, Mars collaborates with other associations such as football teams; the campaign labeled tie-up with UK football in 2008, is seen to have taken £7million. As a promotional strategy of its products, Mars uses the on-pack promotion. This is seen in the promotion that aimed at women and characterized prizes such trips to New York and gifts of shoes.
Mars utilizes the television advertisements to bring about awareness of its varied products. When launching its planets, Mars is seen to have used four million in the television promotion. The re-launching of its products, for example the snicker took 4.5 million pounds. Mars also raised the awareness that its products do not have artificial colors and flavors or preservatives. This creates a good will in the side of the consumers because most consumers like knowing that the products they use are natural, they have not been tampered with the addition of chemicals or other artificial additives (Shimp, 2008).
Nestle is also a chief competitor in the chocolate market. Its slogan good food, good life is meant to create a good will among its customers. Nestle has a wide variety of food products including major sugar confectionery and chocolate brands in the market. Some of its products are kit kat, milkybar, aero, among others.
Repackaging is one of the strategies used by Nestle especially when re-launching its products. For instance, in celebrating the 25th anniversary of its yorkie product, Nestle used a truck-shaped pack for the product. Nestle also extended its brands with the production of small cubes such as kit kat, for easy use. Nestle also produces its brands in a manner that targets specific groups. For example, in 2008, it produced milkbar chocolate products that targeted adult people. It also used the same to strategy to realize more Christmas sales. The company also launches new flavors supporting them with the extensive television promotions. With the notions that not artificial flavors, colors and preservatives have been added to the products, Nestle aims at securing the customer confidence. This also creates a good-will which enables the company to get more customers (Assael, 2009).
From the scrutiny of the chocolate companies aiming to secure more customers and gain the market competitive advantage, it can be deduced that various strategies are used. Though most of the strategies look similar, each company seems to use different approaches such the targeted groups, market coverage, collaborations and brands with their extensions. Relating the promotional strategies used by the three companies above, it is evident that Cadbury has the most competitive advantage, then Mars and finally Nestle. Therefore, for any company to gain the competitive advantage, it must invest in promotional activities and devise strategies that meet customer preferences.
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