Thursday, 15 November 2012
Selling New Selling Less Cadbury’s ‘Krafty’ Business
I had a surprising experience recently when I grabbed a couple of bars of Cadbury Dairy Milk for my basket at a TESCO express.
At first sight I thought I had bought two similar handy sized bars of Cadbury chocolate. The till receipt priced them as 2 @ 59 pence each. On closer inspection, I noticed one bar was a ‘new tablet shaped’ product.
At even closer inspection I discovered the new product had 4 g less chocolate than the old style bar.
Beforehand, 1 p would have bought me 1.204 g now it only bought 0.763g ! Feels a bit of a ‘swiz’ to me ( disappointment L)
Perhaps not that significant difference but for Cadbury they were getting an extra 5p a bar, a £1 for every 20 bars.
The Chocolate Bar sector is a relatively static and inelastic market.
Cadbury’s 49g bar is priced at 59 pence. Perhaps like the Mars bar there is even a Cadbury’s Dairy Milk economic Index.
The product is a nice handy sized treat .
But what is the manufacturer to do if the raw material price of cocoa goes up?
Cadbury ( Kraft) are in business to make a profit.
The conventional options include:-
1. Absorb the price increase and take less profit
2. Reduce the size of the bar and keep the unit price the same
3. Increase the price of the bar
But Cadbury got creative and changed the shape the tablet .
Rivals, Galaxy had changed their tablet to a smoother rounder shape and had come to no harm after all!
Make it into a new shape and hope the customer does not notice or care that you have not only changed their bar’s shape but sold them less chocolate for their money.
None of this is new in the Confectionary world. – BACK IN THE DAY… 1980s
The story went round how rivals Rowntree introduced the Yorkie Bar into what seemed Cadbury’s impenetrable stronghold of the chocolate bar sector in the UK.
Cadbury’s Dairy milk chocolate bar had dominated the UK market for years .
Cocoa prices at that time increased and Cadbury had to decide what to do.
Cadbury chose to keep the unit sales price the same but make the bars a litte thinner.
Meanwhile J Walter Thomson were commissioned by rivals Rowntree to help in develop a product to compete with Cadbury in the block market.
Through market research involving focus group discussions JWT discovered that some customers of Cadbury Dairy Milk although enjoying the taste of the revised bars, had become dissatisfied by the bar being less thick and chunk when bitten into causing it to snap. In a sense customers felt the product had changed and was less satisfying.
They also discovered through research on brand image that Cadbury was seen as a ’ nurturing ‘female’ and ‘ mum’s treat’ type brand.
Then came the challenge to Rowntree of how to create a product to challenge Cadbury’s dominance. A number of names were tried out ‘Trek’ was tried out but failed to appeal to pilot groups. The image proposed was to make the Rowntree bar more masculine .Yorkie bar was launched with its famous adverts of the young rugged truck driver. This was well before the present era of Eddie Stobart knights of the road personalities.
Yorkie was a tremendous success.
Cadbury’s retaliation was the Wispa bar to attack the flagship Aero product of Rowntree. After a while Wispa was dropped by Cadbury; only to be revived due to a facebook campaign by consumers.
Both Cadbury and Galaxy now have Bubbly and X respectively to compete with Aero.
What comes around goes around.
I guess Cadbury now mine the internet for Facebook and Twitter traffic and even blog posts for comments on their new products to measure the reaction of customers.
For all I know this post has been captured in their research on their customers.
I await lorries of Cadbury Dairy Milk Chocolate to come my way but I shall not hold my breath.