SWOT Analysis and Report for Cadbury Schweppes – Business Research Paper
Cadbury Schweppes was founded in the year 1831 by John Cadbury. Its revolutionized cocoa started processing from the year 1866 onwards. This company originally
merged with Schweppes in 1969. Currently, this successful company is employing approximately about 43,000 people worldwide. Today, Cadbury Schweppes is the world’s fourth biggest supplier of chocolate and sugar confectionery.
One of its products, Dairy Milk was introduced in 1905, and has become the most successful moulded chocolate in UK history and the basic ingredient for many other Cadbury products. 95 years later, Dairy Milk is one of the world’s most famous brand names and the company’s leading chocolate bar by revenue.
Sales from Cadbury’s Dairy Milk alone are estimated at over £135 million for 1995. Cadbury considers its success is based on three factors: quality, value for money and good advertising.
Aim: Apply SWOT analysis to Cadbury’s current situation and its position to enter a foreign market
It is important to investigate on the internal and external environmental forces for the Dairy Milk in France. Relevant organizational and industrial information is required for the development of a SWOT analysis. The analysis of the environment and the consideration of the situational factors when designing marketing planning, is critical as it would allow Dairy Milk to capitalize on organizational strengths, minimize any weaknesses, exploit market opportunities and avoid any threats.
Strengths
Cadbury would realize several possible advantages in going abroad. By penetrating a foreign market the company could:
• Maintain a stable growth of a company by maximizing the use of its production capacity and thus increase economies of scale and scope.
• With its brand name, Cadbury could counterattack the competitors it faces in the domestic market by attacking their domestic market.
• Keep up with the financial strength by increasing its sales and profit, indeed the foreign market could present higher profit opportunities than the domestic products.
• Acquisition rules in UK, reduce its dependence on the UK market and therefore diversify its market specific risks.
• Overall, Cadbury has been successful through the new products (development) it has to offer.
Weaknesses
Generally, as Cadbury has a weak position in the US market, thus, need to change its target to a different location. Besides its lack of distribution network, it also has a small total of market share altogether. Therefore in order to market the product in France successfully, Cadbury would have to find out on how it can improve in order to have great performance. It is also good to find out what are the situations that they could avoid in order to be successful. In order to market products the following issues should be considered:
• Total French production of chocolate bars and confectionary, which has increased by 24.5 per cent between 1988 and 1991, has slowed down in more recent years, partly due to the economic slump.
• Consumption of chocolate products, which has been growing until 1991, remained fairly static in 1992, reflecting a fall in demand due to the gloomy economic situation.
• Sales of milk chocolate bars, which account for 24 per cent by volume of total sales of chocolate bars, decreased by 3.7 per cent.
Opportunities
Through its confectionary product line, least to mention is to build viable positions in prioritized markets through organic growth and acquisition. Besides what is mention above, Cadbury has other opportunities to have market development in Russia and China. The Timeout Candy Bar market is growing worldwide. This company is also at the same time distributing its products via the internet – Develop Gourmet Line. Besides developing the “Low Calorie” line of chocolates and sweets, they also offer the “Sugar Free” sweets line. This has thus opened a completely Cadbury world in US.
Therefore in order to get the product into a new foreign market, France, Cadbury would have good opportunities in store for them. Opportunities are as follows:
• In terms of political issues, France is an advanced parliamentary democracy and politically is highly stable. The political power is centralized in the parliament, the Prime Minister and the President. The country specific risk is negligible. France is a member of the European Community and has excellent relations with the UK.
• Economically, France has the fourth largest Gross Domestic Product in the world. It is a first-world advanced market based economy. Despite a recent recession, its economy is very strong and also highly deregulated in line with European Union policies. France represents a very large potential market with a high standard of living and purchasing power. The economy is highly open internationally and conducts a high percentage of trade within its European partners.
• With regards to its social situation, France has a broadly central/southern European culture which has many similarities with the UK. However cultural differences do exist and these must be considered when planning for the market.
• France has a high technological level and a lot of industries are based in the technological sector. This technological base constitutes one of France’s competitive advantages.
Threats
Due to its confectionary products, it is very important for Cadbury to be aware of any present or upcoming threats. The company should take note of the changes in the consumer’s buying trend. It is perceived that consumers might shift from chocolates to “Healthy” snacks. If this were to happen, there might be a poor product development which would tarnish the Cadbury’s name. Needless to say price wars would occur between its competitors like Mars, Hershey and Nestle. Due to the abovementioned, there would be seasonal sales slumps all year round which will reflect to an increase in cost of the raw materials needed. Cadbury would then have to be prepared for growth of small local gourmet chocolates and regional candy manufacturers.
However if Cadbury were to market its products in France, the company has to be aware of the risks it could encounter. It might:
• Not understand foreign customer preferences and fail to offer a competitively attractive product;
• Not understand the foreign country’s business culture or know how to deal effectively with foreign nationals;
• Underestimate foreign regulations and incur unexpected costs.
• Threat of entry due to the competition growing through acquisition.
Obviously any foreign entry decision must take the abovementioned elements into account.
The Ansoff matrix
Product
Present New
Market
Penetration
Product
Development
Market
Development
Diversification
Because Cadbury is introducing its brand name to a new region, in relate to the Ansoff matrix above, it can be argued that it is under market development. Although the company has come up with a few current products, it is targeting to a new market. Despite the competition against the rest (Hershey’s, M&M Mars and Nestle), Cadbury has to have the bargaining power of the buyers in order to be competitive in the market. Although the company need to know that substitutes are not a major concern. Finally, to conclude that Cadbury is in the Market Development, they would have to have the bargaining power of suppliers as they are not in power position due to commodity like nature. And also to be aware of the cost of packaging materials as it has increased over time.
There are a few strategic recommendations that Cadbury could come up with in order to market its products not only in the region of France, but also to market it products successfully. After much discussion on the position of the product currently, the following recommendations could be suggested:
• Increase Frances Involvement by implementing a pound campaign to Launch Timeout in France which has already been done in America.
• Increase Marketing and Promotion globally by marketing products in emerging markets.
• Focus on non-chocolate development/acquisitions by developing line of non-chocolate candies.
• Develop Novelty/Specialty markets—Gourmet Line on Internet, by developing gourmet line to be distributed via internet.
• Aggressive new product development—low calories, sugar free and sweets. This has to be done by researching and developing new products/ joint venture.
Conclusion
In order for Cadbury to reach the peak of achievement, the company would have to stress on the global growth of the product. It can be a risk to market it in the region France, but with careful study of the target market segments and its economic position, it can be an attainment. Cadbury should also look into other countries like the Asia Pacific in order to market its products popular globally. But then again, careful considerations to look at its major competitors and to obtain the rules and regulations of a certain country are equally important.
Another strategic plan would be a joint venture. Since Cadbury Schweppes is a company that produces not only chocolates but also drinks, it should market a new product and maybe get into the product development or get into a total diversification. However, need to bear in mind that it is not as easy as marketing Cadbury’s current products. It took Cadbury almost 165 years to reach to its successful peak today.
Needless to say that in order for the company to market its products globally, it is understood that heavy capital and marketing expenditures have to be sacrificed. Cadbury has somehow gone through this process therefore throughout the past decade; it shouldn’t be an issue that would raise a problem.
Last but not least not to forget that Cadbury should need to strengthen the brand name of its products. This is important due to the fact that since it is popular in the UK and US, the profile of the product should be maintained and not deteriorates.
References
Anonymous (2002), History of Cadbury, www.cadbury.com.au
Anonymous (2002), SWOT analysis – Understanding your Strengths, Weaknesses, Opportunities and Threats, Mindtools website – www.mindtools.com
Boone, L., Kurtz, D. (1992) Contemporary Marketing, Fort Worth, TX: Dryden Press.
Danca, C. A. ‘SWOT analysis’, website – www.stfrancis.edu
Developing your Strategic SWOT Analysis.” Austrainer. (1999) website – www.austrainer.com
Ferell, O., Hartline, M., G., Luck, D. (1998) Marketing Strategy. Orlando, FL: Dryden Press.
“Swoting Your Way to Success” BHC. (1999), website – www.bradhuckleco.com.au
Vrontis, D & Vignali, C (2001) ‘Dairy Milk in France – A marketing investigation of the situational environment’, International Journal of Operations & Production Management, Vol 103 No 4