Consumer Purchase Behavior Analysis Of Cadbury Bournvita And 5 Star (2012-13)

Submitted by: Group No 11

Abhishek Jain (FT13301) Abhishek Sharma (FT13300) Booppathy Sundararaj (FT13317) Guru Prasad (FT13332) Rasika Sampath (FT13363) Srivatsan Ramesh (FT13378)

Recipient: Dr. Tapan K Panda

Date of Submitting the Report: 7th June, 2012

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TABLE OF CONTENTS

1. PROJECT BRIEF

2. COMPANY AND PRODUCT DETAILS

3. COMPANY ANALYSIS

3.1 HISTORY AND GROWTH

3.2 PRODUCT PORTFOLIO AND PRICING

3.3 MARKET SHARE

3.4 FINANCIAL ANALYSIS

3.4.1 NET SALES

3.4.2 NET PROFIT

3.4.3 NET PROFIT MARGIN

3.4.4 EXECUTIVE SUMMARY REPORT

4. COMPETITOR INFORMATION

5. MARKET RESEARCH METHODOLOGY

5.1 DATA COLLECTION

5.2 QUESTIONNAIRE DESIGN

5.3 MARKET SURVEY LOCATION

6. CONSUMER BEHAVIOR ANALYSIS

6.1 CONSUMER BEHAVIOR PROCESS

6.2 CADBURY BOURNVITA – ANALYSIS

6.3 CADBURY FIVE STAR – ANALYSIS

7. CONCLUSION

8. RECOMMENDATIONS

9. APPENDICES

10. BIBLIOGRAPHY

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1. PROJECT BRIEF

i. The core aim of executing this project is to understand When, Why, How and Where consumers purchase a product or do not purchase a product.

ii. Consumer Decision Making process in purchasing a Health Drink and a Chocolate are analyzed.

iii. Products used in this study are Cadbury Bournvita and Cadbury 5 Star in the price range Rs. 100 to Rs. 1000 and less than Rs. 10 respectively.

iv. Consumer Behavior analysis (Pre-purchase and Post-purchase) for Cadbury Bournvita is completed by identifying a total of 36 consumer samples.

v. Consumer Behavior analysis (Pre-purchase and Post-purchase) for Cadbury 5 Star is completed by identifying a total of 36 consumer samples.

vi. Questionnaires used for analysis are basically focused on the 4 P’s of Marketing Product, Price, Place, and Promotion.

vii. Face-to-Face interviews were conducted with every consumer.

viii. Major parameters affecting consumer purchase behavior for both products are identified and inferences drawn.

ix. Inferences are drawn separately for Pre-Purchase and Post-Purchase consumer behavior for both the products.

x. All numbers on the graphs are represented as percentages.

xi. Company analysis of Cadbury India(Kraft Foods) is completed by understanding the Market Share data, Financial Statements, Net Sales report, Net Profit report

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2. COMPANY AND PRODUCT DETAILS

2.1 COMPANY DETAILS

a. Name of Company – Cadbury

b. Year Founded – 1824, Birmingham, United Kingdom

c. Industry – Confectionery

d. Parent Company – Kraft Foods, USA

e. Chairman & CEO – Irene Rosenfeld (Kraft Foods)

2.2 PRODUCTS IN SCOPE OF THIS STUDY:-

Cadbury Bournvita Price between Rs. 100 and Rs.1000

Cadbury 5 Star Price less than Rs. 10

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3. COMPANY ANALYSIS

3.1 HISTORY AND GROWTH

3.1.1 CADBURY

Cadbury, a confectionary company, is a subsidiary of Krafts Foods. The company’s headquarters is in London, UK. The company operates in about 50 countries across the world.

Cadbury’s history dates back to 1824 when John Cadbury started selling his own produce tea, coffee, drinking chocolate, cocoa.

Cadbury’s flagship product Dairy Milk was launched in 1905 followed by Fruit and Nut, Whole Nut, Flake, Crunchie, Roses.

In 1969, Cadbury merged with Schweppes, which was a drinks company, to form Cadbury Schweppes.

Cadbury later acquired Royal Crown, Canada Dry, Snapple, Mistic and others until the year 2000.

In 2010, Cadbury was acquired by Kraft Foods which obtained 71% of Cadbury’s Shares for $18.9 bn.

3.1.2 CADBURY INDIA

Cadbury India Ltd. is a part of Kraft Foods. Cadbury India operates in five categories: Chocolate confectionery, Beverages, Biscuits, Gum and Candy.

In India, Cadbury began its operations in 1948 by importing chocolates. After over 60 years of existence, it today has six company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) Hyderabad and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The corporate office is in Mumbai.

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In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years as it enjoys a value market share of over 70 percent in the category.

In the Milk Food drinks segment our main product is Bournvita - the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader. Cadbury India recently entered the biscuits category with the launch of the Worlds No 1 biscuit brand Oreo.

Some of the key brands are Cadbury Dairy Milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls, Éclairs, Bubbaloo, Tang and Oreo.

3.1.3 KRAFT FOODS

Kraft Foods are the world’s second largest food company with annual revenues of $49.2 billion. Kraft Foods' ( KFT ) market share in the global chocolate and candy markets has traditionally trended in the range of 5-6%. The firm's market share rose sharply in 2010, to 15%, driven by its acquisition of Cadbury for a whopping $19.5 billion. This acquisition strengthened Kraft's presence in the global chocolate and candy market, particularly in emerging markets like India where Cadbury had maintained operations for many years.

Kraft Foods has its presence in approximately 170 countries.

Twelve of the company’s iconic brands—including Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Trident and Tang—generate revenue of more than $1 billion annually, and 40 of them are century old brands.

Kraft Foods primarily competes with Nestle, Kellogg Company ( K ) and General Mills ( GIS ) in the confectionery market.

More than 80 percent of Kraft Food revenues come from products that hold the No. 1 share position in their respective categories. And more than 50 percent of revenue is driven by categories where our market share is twice the size of the nearest competitor.

A leader in innovation, marketing, health & wellness and sustainability, Kraft Foods is a member of the Dow Jones Industrial Average, Standard & Poor’s 500, Dow Jones Sustainability Index and Ethibel Sustainability Index

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3.2 PRODUCT PORTFOLIODairy Milk Celebrations

Bournville Perk

Gems Bournvita

Tang Oreo

3.2.1 Market Price of Products used in this study

Product Price Bournvita 85g Rs. 25Bournvita 500g Rs. 1715 Star 13g Rs. 55 Star 27g Rs. 10

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3.3 MARKET SHARE

3.4 FINANCIAL ANALYSIS

3.4.1 Sales

Sales has gone up from Rs 1006 Cr in 2005 to Rs 2045 Cr in 2009, an increase of 103%

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3.4.2 Net Profit

Net profit has gone up from Rs 45.95 Cr to Rs 188.63 Cr, an increase of 310%

3.4.3 Net Profit Margin

Net profit margin has gone up year on year from 2005 to 2008, while in 2009, it has Marginally reduced from 2008 to 2009

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3.4.4 FINANCIAL STATEMENTS

EXECUTIVE SUMMARY REPORT 2005-2010

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4. COMPETITIOR INFO

The major competitor of Cadbury India is Nestle.

Below table shows the financial details of Nestle.

Sales turn over 0.434603784 43.46037839

Reported net profit 0.585956416 58.59564165

Net profit margin 0.105 10.5

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5 MARKET RESEARCH METHODOLOGY

5.1 DATA COLLECTION

5.1.1 Primary Data

o Pre-Purchase consumer behavior is analyzed by identifying a total of 36 consumer

samples for two product ranges.o Post-Purchase consumer behavior is analyzed by identifying a total of 36 consumer

samples for two product ranges.o Face-to-Face interviews were conducted with every consumer

o Interviews were conducted using semi-structured questionnaires prepared separately

for each product range.

5.1.2 Secondary Data

o Secondary data for Consumer Analysis and Company Analysis are collected from

Internet, Prowess Database, and Magazines.

5.2 QUESTIONNAIRE DESIGN

o Two separate questionnaires were prepared for Pre-purchase behavior and post-

purchase behavior.o Questionnaires basically focused on the 4 P’s of Marketing Product, Price, Place,

Promotiono We have also tapped the demographic details of consumers, namely Name, Age,

Location, household income and family size.

5.3 MARKET SURVEY LOCATION

o Face-to-Face interviews were conducted in Supermarkets in Anupuram,

Mahabalipuram, and Chennai.

5.4 ANALYSIS TECHNIQUES USED

o The customer responses for various questions are measured and are represented

using descriptive charts such as Pie-charts, Bar charts, Venn Diagrams.

o Statistical Analysis Technique Chi-Square distribution to identify interval estimates

and conducted hypothesis test about a population variance.

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6 CONSUMER BEHAVIOR ANALYSIS

6.1 CONSUMER BEHAVIOR PROCESS

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Need Perception/Sensation

Cognition

Market Information Research

Preferences

Budget Constraints

Purchase Decision

Purchase

Satisfaction Dissatisfaction

Habit Formation

Referral

6.2 CADBURY BOURNVITA – ANALYSIS

6.2.1 Bournvita Pre-Purchase

Who plays a major role in buying decision

Do you decide to purchase a particular health drink based on the freebies that are offered with it ?

What kind of offers would you like to get along with the health drinks?

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Health drinks largely cater to the children’s market and therefore, kids have a major influence in the purchase.

Offering freebies does not make much of a difference to the buying behavior, in spite of Bournvita being a higher value brand.

Most consumers (67%) expect value for money from the health drink in the form of extra quantity offers rather than free gifts or discounts.

What kind of packaging do you prefer?

Flavors expected out of a health drink?

What is the need to buy a health drink?

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Refill packaging is most preferred due to reusability.

Chocolate is the most preferred flavor for health drinks

Substitute for coffee/ tea

Taste

Nutrition

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TOMA about Bournvita?

Statistical Analysis Technique - Chi Square distribution

• For the sample size of 18, we are using the Chi-square distribution value to develop interval estimates and conduct hypothesis test about a population variance.

• The degrees of freedom are 17.• From the table, we see the limits are 7.564 and 30.191 and the calculated value is 9.77 which

fall in the 95% coincidence level.• From this, we can infer that the purchasing decision is not influenced by the advertisements.

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Health drink...nutrition and taste...creamy lather...taste...yellow...children’s favourite

6.2.2 Bournvita Post-Purchase

Source of awareness about Bournvita

Reasons for buying Bournvita

This shows that the nutritional value is of high consideration while buying a health drink like Bournvita. Taste is the only other factor. This is probably why all the advertisements for health drinks emphasize on these two factors

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Least satisfying attribute

Changes in consumption pattern:

Increases Decreases No changea. If price is increased √ √√√b. Advertisements √√√

The advertisements have no influence on the purchase behaviour of the respondents. Just 6% (namely, one respondent) said it was an influence.

What influenced the purchase of Bournvita?

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In general, respondents are satisfied with all

aspects of Bournvita and

have nothing to complain about. A very few feel the nutritional value

and the taste could be improved.

√- above 20%, √√ - above 50%, √√√ - above 70%

Cadbury’s is a brand that has instilled a lot of trust in consumers over time

USP of Bournvita according to the respondents

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Although we saw previously that most people purchase Bournvita for its nutritional aspects, they seem to think the USP of Bournvita lies in its taste.

6.3 CADBURY 5 STAR – ANALYSIS

6.3.1 5 Star Pre-Purchase

Preferred flavor of chocolate ?

5 star - caramel flavored chocolate has an advantage that caramel has maximum preference as compared to other flavors of chocolates. 5 star also comes in “fruit and nut” flavor which is the second most preferred. Therefore, Cadbury has capitalized on the flavor preferences of consumers.

Ideal purchase price?

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No respondent is willing to pay beyond Rs.20 for a normal bar of chocolate.

Are the consumers interested in buying one pack of Rs.10 or two packs of Rs.5 each ?

Chocolate consumers in the household :

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The perception is that the quantity is more if two Rs.5 chocolates are bought compared to a single Rs.10 bar. Also, the feeling is that sharing with others is easier if there are more units.

The times when chocolate used to be marketed as a kid’s product is passé as more and more adults are indulging in these sweet treats. In fact their chocolate consumption is nearly as much as the children.

Place where they purchase chocolates from:

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WHY?

None of the respondents felt the freebies offered with chocolates changed their purchasing pattern. The taste is the primary influencing factor for them when it comes to chocolates.

Although the survey was largely conducted in the small towns of Mahabalipuram and Anupuram, the importance of offering traditional sweets is slowly fading away and more and more people prefer offering chocolates as it has more universal appeal. According to our data, 72% of respondents prefer giving chocolates as gifts during festive occasions rather than sweets.

Influence of advertisements

The respondents were asked to rate the level of influence that advertisements have on their purchase behavior on a scale of 1-5, 5 being the maximum influence and 1 the minimum.

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A majority of respondents (89%) recollect some chocolate advertisement. The most recalled were Dairy Milk advertisements. Following were the things/ phrases that appealed to them about the advertisements (the ads recollected were all in Tamil as the respondents were all from small towns in Tamil Nadu):

o “Sweet edu, kondaadu”: Dairy Milk – the

message is that every celebration starts with a Dairy Milk.

o “Kanna laddoo thinna aasaya?”: Dairy Milk

shots- the message is about a man getting lucky twice. Has a humor quotient about it.

6.3.2 5 Star Post-Purchase

Why choose 5 star over other chocolates?

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The general observation is that customers are not greatly

influenced by advertisements. This could also be because

advertisements more often work on the sub conscious level and in

an indirect way. Therefore, customers may not be aware of

the extent of influence advertisements have on them.

For most consumers of 5 star, the taste stands out as the motivator to purchase it over other chocolates. The brand (Cadbury’s) is a major motivator too.

Ease of availability was the primary motivator behind the choice of the purchase point. All respondents except for one think 5 star is value for money. The respondent who felt otherwise felt a price of Rs.2 is ideal for a bar currently sold at Rs.5.

All respondents except for one would like to receive additional quantity as an added value in 5 star. One respondent feels free gifts add value to 5 star

Whether they recollect any advertisements of 5 star?

Changes in consumption pattern:

Increases Decreases No changec. Bulk purchasing if

given a discount√√ √

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Ramesh-Suresh advertisement was most recollected.

The advertisements did not influence them to purchase the product.

d. If offered 10% extra quantity in each bar

√ √√

e. If 5 star offered free gifts

√√ √

f. If price increases from Rs.5 to Rs.10

√ √√√

Advantages and disadvantages vis-a-vis other chocolate brands:

Has %

5 star Brand 33

Quality 11

Reasonable price 33

Nutrition 6

Taste 17

Other chocolate brands Better taste 22

Reasonable price 17

Quality 11

Nutrition 11

Crunchy biscuit 6

Brand 6

Nothing in particular

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The brand and price of 5 star is by and large an advantage for Cadbury’s over other competitors. However, not many seem to like the taste of 5 star when compared with other brands. On the whole, 5 star seems to be at a fairly advantageous position vis-a-vis other similar chocolate brands.

Preferred flavor of 5 star

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√- above 20%, √√ - above 50%, √√√ - above 70%

These are the attributes which the respondents felt 5 star has but other brands lack.

These are the attributes which the respondents felt other brands have but 5 star lacks.

Fruit and nut is clearly the most preferred existing flavor of 5 star. The 5 star crunchy is not preferred by any of the respondents.

Other flavor suggestions for 5 star - Coffee, mint and coconut were the choice of a few. However, a majority was happy with the existing choices and was not particular about any other flavors.

5 star as a gift, replacing sweets?

7 CONCLUSION

5 STAR: As per our report, almost three fourth of the people prefer caramel and fruit and nut flavors in

chocolate.

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The trend of gifting chocolates instead of traditional sweets has not caught on in a big way in this part of the country.

More than half of the people feel that the ideal price for the chocolate is from 5 Rs to 10 Rs. People prefer to buy from supermarkets and local provisional stores because of ease of access.

The most important aspect that determines the purchasing behavior of a consumer is the chocolate’s taste.

Most people would like to gift chocolates instead of sweets.

Based on the above facts, the market share that 5 star has can be attributed to the following properties of 5 star.

5 star is readily available in almost all the supermarkets and provisional stores in both the caramel and Fruit and Nut flavors.

The low price of the chocolate makes 5 star a value for money. Although it is not the best tasting chocolate, the lower price makes it one the highest selling

chocolates. Although people like to gift chocolates as replacement of sweets, they do not prefer to gift 5 star

as a gift.

BOURNVITA:

As per our report, almost two thirds of the decisions of choosing the brand of a health drink are done by adults in the family.

More than half of the people prefer to have extra quantities as promotional offers. Nutrition is the major factor while choosing a health drink, which is followed by taste. Almost two third of the people prefer the chocolate flavor in health drinks. More than half of the people would prefer their health drinks to be in refill packs.

Based on the above facts we can comprehend that Bournvita is one of the leading brands in the health drinks field because of the following reasons:

As the decision to purchase health drinks is done by adults and nutrition is major factor behind purchasing a health drinks, Bournvita , with its focus on nutrition , has a great advantage.

As people prefer to buy chocolate flavor in health drinks and taste being the second factor while purchasing a health drink, the chocolate flavor and better taste of Bournvita has really helped its case.

More than 80% of the people feel that that the brand name of Bournvita also plays a big part while choosing Bournvita as a health drink.

Almost everyone unanimously agreed that they were satisfied with the nutrition and taste offered by Bournvita

8 RECOMMENDATIONS

5 Star Improve the market campaign and advertising strategy of the Fruit and Nut and Crunchy flavors

of 5 Star as these flavors are lagging in the market. Based on the suggestion for the new flavors, coffee seems to be a good option for a new flavor.

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Bournvita

Based on the report, people prefer to have extra quantities as an offer. An extra 10% would help increase Bournvita consumption and thereby increasing the sales.

Word of mouth seems to be dominant factor of advertising. Bournvita needs to improve its advertising campaign as advertisements are not a leading factor behind people choosing Bournvita.

Majority of the people were unaware about the advertisements of Bournvita. The lack of advertisements of Bournvita in regional languages is an important factor that has led to this unawareness. More focus on advertisements in the regional languages could really help increase the sales for Bournvita.

9 REFERENCES

Websites:

http://www.moneycontrol.com/stocksmarketsindia/

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http://www.cadburyindia.com/in/en/home/index.aspx.

http://www.kraftfoodscompany.com/welcome.aspx

Prowess 4.0

Books:

Marketing management-second edition by Dr. Tapan K panda. Statistics for business and economics by Anderson, Sweeney and Williams

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