The Chocolate Industry In India

Introduction

This assignment deals with the organization whose current main product reaches maturity stage in the market life cycle and its sales have been reduced, to sustain its market share the organization has to go for product development to guard it from its competitors.

The organization chosen for this particular situation is Lotus Chocolate Company Limited.

An Overview of Chocolates Industry in India

The chocolates industry in India as it stands today is dominated by two companies, both multinationals. The market innovator is Cadbury with a lion's talk about of 70 percent. The business's brands (5 STAR, Gems, ‰clairs, Benefit, Dairy Dairy) are leaders their sections. Till the first 90s, Cadbury acquired a market share of over 80 percent, but its party was spoiled when Nestle appeared on the landscape. The second option has launched its international brands in the country (Kit-Kat, Lions), and now commands approximately 15 percent market share(rediff. com). The Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Areca nut and Cocoa Companies and Processors Co-operative (CAMPCO) are the other companies functioning in this portion. Competition in the segment will get keener as international chocolates giants Hershey's and Mars consolidate to seize a bite of the Indian delicious chocolate pie.

Per Capita Chocolates Utilization (in lb) of first 15 countries of the world

Rank Countries Per Capita

Consumption (in lb)

1 Switzerland 22. 36

2 Austria 20. 13

3 Ireland 19. 47

4 Germany 18. 04

5 Norway 17. 93

6 Denmark 17. 66

7 UK 17. 49

8 Belgium 13. 16

9 Australia 12. 99

10 Sweden 12. 90

11 USA 11. 64

12 France 11. 38

13 Netherlands 10. 56

14 Finland 10. 45

15 Italy 6. 13

INDIA, stands nowhere even near to these countries when compared in conditions of Per Capita Chocolate Utilization. (Data sourced from LMC International, The planet cocoa market outlook). Delicious chocolate and confectionary market is respected around US$ 282. 6mn and which is divided into three main sectors or groups particularly sugar boiled confectionery with US$ 65. 2mn, next comes chewing and bubble gums with US$ 87mn and the major chunk would go to milk delicious chocolate with US$ 130mn. Delicious chocolate Consumption Composition by age ranges are as follows-

Children 55%

Adults 12%

Young People 33%

(Data sourced from Summary of Indian consumer goods)

The chocolate market in India grew by 19 per cent and reached the marketplace value of INR 17. 9bn(2007), low utilization habits have been changing because of the raising

economy(www. just-food. com). The marketplace is divided into two segments metropolitan and rural segments, the consumption of delicious chocolate is higher in urban areas and reduced rural segment, the growth rate of urban is higher( Data sourced from Overview of Indian consumer goods). This poses a high potential for chocolates manufacturers as the increase in society who are opting for chocolates as alternatives as local mithai's, as part of cultural transition due to the high affect of western civilizations at work and other areas(The Dark Chocolate Rush).

Background of the organization

Lotus Delicious chocolate Company Limited is made in the year 1992 (www. lotuschocolate. com), It really is renowned for its innovative delicious chocolate design and their variety tastes in comparison to competitors. The plant is situated at Medak area Andhra Pradesh. They provide consumer and industrial solutions for different chocolates manufacturers. The famous delicious chocolate brands/products produced are Chuckles, Superr Carr and Tango. Lotus is also well-known for producing customized chocolate gift packs upon consumers get(www. lotuschocolate. com). The main target market of the business is the reduced end topic group(children & young adults). The organization lost its center market share due to the increased marketing initiatives and rapid development of new products predicated on changing customer trends(The Hindu Bussinesline).

Issue-1

Decline of Lotus chocolates brands (Superr carr, Tango & chuckles) on the market credited to changing consumer and chocolate industrial patterns, high competition from more developed multinationals such as Nestle & Cadbury. The primary purpose of Lotus chocolates company ltd. is to restore its market share and stand against competition.

SWOT Analysis

Strengths

Experience in chocolate industry.

Brand presence in the market.

Established industrial distributor.

Medium creation capacity.

High suppliers base.

Customized products facility for consumers.

Weaknesses

Limited distribution service outside South-India.

Poor advertising strategies.

Limited product range.

Limited resources.

Opportunities

Strong growth probable in South-India metropolitan region.

Raise in chocolates consumption.

Market expansion into North-India.

Changing consumer patterns patterns.

Threats

Aggressive market penetration by multinationals

Price sensitive market.

Competitive position of Lotus is fragile.

Increasing production costs.

Vast cultural affects on buying habits.

Alternatives to restore the marketplace position and share by using Ansoff's Matrix

Option A - (Market Development) Producing markets other than core marketplaces, such as getting into north Indian market or getting into other markets where the product

or brand is not present.

Option B - (Diversification) This option deals with moving the pursuits of the organization's key interest into other businesses pursuits, for instance moving away from chocolates and entering into cold drinks or clothes or etc.

Option C - (Market Penetration) This option deals with penetrating the prevailing center market with lower prices and much more products with enhanced distribution operations.

Option D - (Product Development) This option deals with producing new products

to compete on the market and to sustain the company's presence on the market.

Recommendations

A mixture of market penetration ( C)and product development (D) because for the following reasons

This gives opportunity for Lotus chocolate to build up something to preserve its brand value, market share, to increase its budget and consumer bottom.

Due to increased competition on the market, developing innovative tastes and along with producing chocolates with lower health effects such as Organic chocolates. As the organic market is gaining interest among the higher class segment(India's booming organic and natural market, rediff. com).

Market penetration helps Lotus delicious chocolate to revitalize its circulation systems and revitalize its brand image on the list of targeted consumers at sustainable price as the brand has its occurrence already in the market.

Product development helps Lotus chocolates to over come its previous weaknesses and product is the central and brand enhances its value.

The rising chocolates consumption poses a chance which can be changed into financial means, develop a strong brand image and devoted consumers.

Why not for Market development & Diversification can be justified by the next sentences-

Market development needs much bulkier finance and it requires to invest more time & resources, it handles getting into new markets that happen to be more technical and the risk is higher, in-turn focusing on new market segments may resulted in the fall of existing marketplaces. Diversification handles completely moving from central procedures into new businesses which is very risky and needs enough time to build up and build reputation from scuff, these two options would need high financial resources. Predicated on the present situation and Lotus chocolates swot research the best and possible options are market penetration and product development which deals with existing markets.

After deciding on what course of action to be taken for sustaining and developing the brand value and consumer foundation. The options and strategies chosen are product development and market penetration. After deciding to travel for product development next comes what product to build up and whom to focus on, how to reach them and what exactly are the core benefits the product is to deliver and the worthiness chain process from suppliers to consumers.

The strategy opted for reaching the identified status of position is focused differentiation strategy in conjunction with best cost specialist strategy from porters five universal strategies(Thomson etal, pg. 134). The focused differentiation strategy specializes in a narrow buyer section and outcompeting rivals insurance agencies lower costs than competitors, best cost company strategy deals with presenting customers more value for their money by incorporating good to excellent product attributes better value than competitors.

According to articles named India's booming organic market expresses that India would be both a major organic food manufacturer and consumer, the probable of consuming organic and natural foods are on a increase due to increased recognition about health insurance and having environmentally friendly raw-materials. Regarding to article named Global Organic Business the consumption of Organic drinks and confectionary would increase greatly in India by 40 % by 2020, starting early on would be better option to experience the future benefits and would help us to determine ourself on the market. The core aim for group is children aged from 14 to 18 yrs. old, teens and adults from rich urban segments and upper middle income sections.

Branding of Hercules

Branding contributes value to the merchandise and gives additional id to the products and their consumers, products mite change but brands will not change and once a brand chooses its personas and features it remains steady for longer time. Expanding optimal brands requires a change in corporate management culture and their frame of mind. The influence for deciding a brandname character is described below

Branding is one of the primary element in the success of the product in the market, the proposed brand values for Hercules is its prime nature, pure nature and energy, individuality and freedom. As Hercules is not a just a chocolates its more than an luxury experience.

Marketing Mix

Marketing mix involves 4 P's namely product, price, campaign and place (distribution). The right strategies for each one of these P's are essential for success of the merchandise or service on the market.

Product

Product is the physical consultant of the company's core value move from firm to the consumers. Product strategies offer with the issues such as package deal, product form, product features and product quality. The package is designed based upon the prospective market and product features. The shape is also designed predicated on the perceived best by the prospective market and brand image. Packaging also has implications on the perceptions of the consumers which visually charm them and classify the merchandise into top quality product. The degrees of product are as follows-

Core Product- The core great things about the organic chocolates is that of its health benefits and tastes variety.

Tangible Product- The tangible are those benefits which sit by the packaging and advertisements. Because of this organic chocolate the tangible benefits are superior quality.

Augmented Product- The augmented benefits are the principles which reach the consumers goals, that happen to be non-tangible and can be assessed only in-turns of consumer reply in favor of praising the merchandise.

Potential Product- The potential product benefits surpasses the anticipations of consumers and the core-product, which would obtain large consumer's pleasure.

Product differentiation strategy supplies the key source for competitive gain, this also provides a platform for producing future products under the same brand. Product strategy is straight from the strategies of the organization.

The product line is available in two editions of weight particularly 100gms and 200gms.

Name of the Organic and natural Delicious chocolate is "Hercules"

Price

Pricing strategy handles pricing the merchandise based on the existing market pricing structure, organizations break even, psychological pricing. The charges strategy is also

based on the merchandise and the targeted consumers. The charges strategy used because of this product is a mixture of premium rates and quality-based strategy. The social aspects of the prospective market has a profound effect on spending and food behaviors. The costing of the new product is one of the tough careers of management. The cost of the merchandise has direct relationship with placement of the product. The factors to be considered while deciding a cost for Hercules are as follows -

The consumer spending composition and their patterns should be analyzed and find the common and the best cost searching for Hercules.

The companies charging systems and proposed investments for developing Hercules and the rate of profits expected by the organization.

The brand strategies and the positioning strategies proposed for the Hercules also have their share on deciding the purchase price.

According to the article defining the prime chocolate market, the looks of luxury chocolates in the excellent marts as the aspirants for consuming luxury has become a tendency and even those who cannot spend the money for luxury goods are experiencing prime chocolates as alternatives to fulfill their urge to feel great. A research display from Ledbury Research states that there would be 140, 000 individuals in India with gross annual income around $230, 000. The consumers spending have dramatically increased on apparels, food and entertainment.

The rates strategy which includes been determined is value-based costing and quality based

pricing, the purchase price decided after determining the ROI, developing costs, promotional costs & distribution cost is 75 rupees for 100gms and 150 rupees for 200gms. That is unpriced structure across the market. The custom ordered chocolates online are listed based on their ordered amount and their taste structure.

Pricing is performed in a way to differentiate from rivals and duplicate products that happen to be a major menace in Indian market, Firm to go towards price quality for better market acceptance.

Distribution

Distribution deals with making product available to the consumers at right time and right place, the things to consider for creating the circulation network deals with the consumers choice, company's resources and market infrastructure. The circulation sector in India is fragmented and completely complex due to the large size and important infrastructural problems such as electricity, streets and warehouses. The primary circulation system is divided into three segments namely marketers, wholesalers/super-marts and shops.

The major factors which influence the distribution strategy for the Hercules is the merchandise strategy, organizations technique for business, aim for consumers. The strategy which is selected for distributing this task is selective circulation which means the business selects few syndication channels to reach target markets by which the product availability can be controlled by the business, this also assists Lotus chocolates to keep their brand image and to maintain the high quality image of the product. Predicated on the rivals distributions stations, consumers choice and possible options of the organization the selected ways to attain the prospective market are ultra markets, premium chocolates stores, hyper department stores, airports(obligation free stores ) and through internet directly to consumers (online). The syndication picture can provide you a total idea about Lotus chocolates distribution programs for Hercules.

The picture areas they are single layer stations, double layer channels and triple covering distribution channels to attain the targeted consumers.

As developing a strong customer platform and differentiating the Hercules from other competitive brands and products, Lotus chocolate has developed a program because of its customers to design their own organic delicious chocolate online with the available choices, through this options customers can directly buy and give their feedback directly.

Promotion

This is one of the most important aspect of the marketing mix which would make a decision the success of the Hercules(Organic chocolate ) on the market. Promotion handles promotional activities such as advertising, promotional strategies such as offers, discounts, public relations and publicity.

The advertising aspects aim at creating an impact about the Hercules on your brain pieces of targeted consumers. We will use one of the oldest marketing strategy for promoting the merchandise to the mark market through AIDA model (www. changingminds. com), AIDA means to attract by visual appeal such as cool advertisements, create interest among the mark market, then develop desire among consumers by demonstrating more information about main and potential benefits of Hercules and the ultimate the first is action this is known as done when the consumers by the product. In addition

to the AIDA model, the consumers interest through sharing benefits and principles, opinions with customers and requesting their feedback via blogs, post and e-mail. The channels used to attain the prospective market are through printing media, internet, tv set, out-door campaigning and point of deal.

The basic subject matter in the proper marketing communication would be more of product focused and would describe about the products core benefits and its own core principles which add value to the target market. The chocolates are promoted through 360 level for complete. The tv channels which are recognized for reaching target markets and their show are explained below

The subliminal meaning which we want to spread to consumers is that Hercules is not just a chocolates but its an excellent and joyful experience and its own merely more than a chocolate. This must also break and build the present brand image of Lotus chocolate company Ltd. Promotion and reputation of the product are directly proportional to one another. Emotional flavour infusions in the marketing campaigns would entice the targeted consumers. While marketing in India you must understand the cultural areas of the target market. Hofstede's social dimensions would assist in understanding cultural areas of the consumers and also helps in creating an innovative message. The graph below explains vitality distance index, individualism, masculinity, doubt avoidance index and long term orientation.

Sourced from (http://www. geert-hofstede. com/hofstede_india. shtml)

As the above mentioned graph suggests that higher PDI means higher inequality among different sections of people, its also indicates that India is a collectivistic society, uncertainty avoidance is lower at 40 per cent which indicates that people are available to any uncertain situations and ideas. (wwww. geert-hofstede. com).

By understanding the above graph the meaning through with we have to reach our target market should be designed and developed in way that it will touch them culturally and make clear medical benefits and environmental benefits Hercules will provide.

Other than television ads, there's also other channels by which we can reach consumers such as wall membrane paintings, print advertising advertising such as posting in premium mags of sports activities, movies, business and computer animation. Point of sales posters at cabinets at ultra stores, out-door campaigning at department stores and multiplex theatre halls, conducting tournaments on environment at international institutions for faster advertising among classes. Another important form of advertising through online such as website, pop-ups at yahoo, google, windows email, orkut, twitter, face-book plus much more. One more facet of promotional route which is gathering popularity is mobile advertising such as through mobile phone information and mobile games.

The utilization of full resources at maximum rate would help Lotus delicious chocolate to create an impact in the market and marketplace and helps to set up the Hercules.

Evaluation of the Hercules Success in the Market

Evaluation is done predicated on the sales habits.

Consumer sense are gathered using feedback such as compliments and problems.

Key partnership with merchants and examining the consumer patterns towards Hercules.

A key research for understanding the current advertising strategy and the message handed down through them and what target consumers understand and understand.

Marketing & Creation Schedule/Plan for Hercules

Production objectives

The main objective is to procure inexperienced or organic or chemical substance free cocoa and other raw-materials. Insure the product quality is double checked out.

Ensuring that the procedure flow is even and meets the production capacity.

Targeted production percentage is to produce 75 per cent of Hercules than other nominal brands that happen to be out competed.

Production of customized Hercules for personalized orders should be produced 25% of the total capacity.

Marketing & management objectives

Increase the consciousness about Hercules among the target market sections by 30% per annum.

Decrease the customers level of resistance by twenty five percent per annum.

Position the brand image of Hercules as high grade & luxury delicious chocolate and stand differentiated on the list of competitors by giving personalized chocolates for consumers.

Strengthening of non-priced competitiveness, business restructuring by

rebranding the image of lotus chocolates company and Hercules brand.

Demand creation, sustainment and augmentation of quality advantages and healthy products.

Increase the sales of Hercules by 5-6 % per quarterly.

Marketing Plan

02/05/10

Brand image and product development

05/06/10

Product evaluation for quality, style, color and odor

20/06/10

Promoting Hercules brand through tv commercials

25/06/10

Promoting through out door campaigning, printing media, radio.

30/06/10

Passing the product through distribution stations and rendering it available to the mark consumers.

10/07/10

Evaluating the outcomes of the advertising campaigns & promotional activities.

20/07/10

Developing option and choosing ambitious campaigning.

The alternatives for promoting Hercules is by pairing with brands that happen to be identical and helps each other to advertise themselves as premium brands. For instance promoting Hercules (organic delicious chocolate) with BMW or any luxury brands.

Or

Promoting Hercules with high grade airlines through presenting complementary packs to business category flyers, or promoting with top quality celebrity hotels.

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