Cadbury Company__♥♥

Introduction to Cadbury

Cadbury, a chocolate brand was founded almost 200 years ago which in year 1800. Cadbury is one of the faster growing companies among the multinationals and national companies; Cadbury Dairy Milk is a brand of chocolate which made by the milky and dairy products. In 1847, the first bar of chocolate appear which made by a Bristol company Fry & Son and the first person who eating the chocolate recipe was developed by Dr. Hans Sloane when he travelled to South America where he focused on the cocoa and food values. In 1897, the Cadbury milk chocolate was launched. After 7 years, George Cadbury Jnr was given the challenge made a chocolate bar with milky and dairy. So the Cadbury Dairy Milk was first introduced in UK and US in 1905 and also introduced in India in 1948. In India, Cadbury Dairy Milk has been a part of every moment of festival, celebration, happiness and also joy (Cadbury Website).

Product of Cadbury

Cadbury made many different types of chocolates and other products which sold and promote in majority of the countries all around the world such as India, Canada, Italy, France and almost all the countries.

These are the products and chocolate that sold by Cadbury:
Blocks of Cadbury Dairy Milk Chocolate
Chocolate Bars
Cadbury Crackle
Bourneville
etc.

Market Structure

Cadbury adapts a monopolistic competition market structure. Monopolistic competition defined as, they can sell a slightly different product in many or several firms but not the same product. For example, Cadbury had operated almost 10 large firms in the market but there are several small firms who also produced the milk and dairy products in the market. Effectively, the market share of each firm had large number of sellers but it is a small market shares, no collusion which firms do not cooperated with others firms and they are independent. Cadbury is considered as a monopolistic competition because it is easy to enter the market of food production because there are many buyers and limited number of sellers. There are no change in the taste and the quality of their chocolate because they have their own secret recipe for making their chocolates. Besides that, there is no restrictions to entry and exit into the market (easy come, easy go) and they also a price maker which means that they do the influence of the price.

Cadbury had used a lot of advertising strategies to promote their chocolate, increase the demand and advertise the production of quality.  Basically, their chocolate had usually targeted on the children and also adults with their advertising and packaging design because they know that their customer’s target would be attracted to any chocolate of the brand. Cadbury used television, posters, magazines, newspapers as the advertising media for them to advertise their product. Besides that, sometimes Cadbury promote their chocolate with “buy 2 free 1” promotion when during a festival, joy, happiness, celebrations and others. During the promotions, their Cadbury chocolate’s demand should be increase because if when the price is low, customers will purchase more so the demand of Cadbury chocolate should be increase.

Market Share of Cadbury in production

Cadbury Dairy Milk has a high market share and it’s getting higher and higher because Cadbury gives their consumers more valuable products. Nowadays, Cadbury has hold 70% of market share in a country, and dairy milk is alone holds the 30% of market share in several firms in others countries.

From the two graphs above, we can see that as a market leadership, Cadbury is enjoying for the past few years due to its high quality seeds, competitive prices and a large marketing network.

Product launch of Cadbury

This flow chart shows that Cadbury launches new products in a certain period so that they can continue their business in a long run.

Determinants that affect demand

The determinants that affect demand curve below will influence the demand curve shifted to rightward (demand increase) or leftward (demand decrease).

Income: If the consumer’s income increases, the willingness and ability to pay for Cadbury is higher so the demand will increase. However, if the consumer’s income decreases, then the demand will decrease because the consumers will not willingness and ability to pay for Cadbury is lower.

Price of related goods: Cadbury chocolate is made by milk, cocoa bean, sugar, cocoa powder; if one of these complementary goods’ price increases, the price of Cadbury chocolate increased but the demand of it will not be change. This is because Cadbury had their loyal brand customer, so if the price of complementary goods increase, the willing of customer to buy and pay will not affected on the demand of Cadbury.

Celebrations: During the festivals and celebrations, Cadbury will create a promotions, customer will buy Cadbury as a gift. So, the sales of Cadbury will increase and also the demand.

Preferences and Taste of customers: Cadbury provides several flavour of chocolate, customer will having the interest to try the new flavour chocolate. So the demand of Cadbury will increase because customer might be purchase the new flavour chocolate after tried.

Price: If the price of chocolate slightly increases, the demand of chocolate will not be affected. But if the price of chocolate decreases, then the demand of chocolate might be slightly increases.

The affected of elasticity of demand in Short-run and Long-run

In the short-run period of time, if the price of the dairy milk chocolate suddenly increased but also decreased the demand of chocolate. Thus, the demand for milk is belongs to inelastic. So the demand in long run might not be much affected. In short run, there also have few criteria that affect the elasticity of demand when their product should be in the monopolistic competition market structure and they also non any changes in quality and taste seen they have their own secret recipe.

In the long-run period of time, if the price of the dairy milk chocolate increased in 2005 from $5 and it will $10 in 2010. Thus, the quantity and quality of their products will remain the same compare to the others product like Kit Kat. If they don’t want to change any prices, qualities or quantities; then it will extremely affected the demand of the dairy milk and it also started decreasing a day by day. Assume that the chocolate may increase in the manufacturing units of good quality and there also the possibility of changes in technology and product innovation opportunities in the long-run.

Determinants of Elasticity

Level of income: When customer with a high incomes, no matter how much change in price of chocolate, customer will also willingness and ability to pay for it. It considered as normal good.

Habits of customers: Chocolate lovers are tends to have an inelastic demand for chocolates. Although the price of chocolate is increases, the chocolate lovers will still continue purchase for the dairy milk chocolate.

Necessities: Necessities is indispensable in our life, so a small amount changes in price will not cause rapidly change in demand. For example, whether the price of dairy milk chocolate fall or rise, it will not cause any change in demand of the chocolate. In this situation, it considered an inelastic demand.

Cadbury taken over by Kraft: Kraft wanted Cadbury to provide the scale for the snacks businesses, especially in India market. When it is not for sale, then the challenge for Kraft is how to acquisition for the Cadbury.

Conclusion

In conclusion, Cadbury is one of the largest firms which produce chocolates products in the world. Cadbury is classified as a monopolistic competition market. In monopolistic competition, their products are slightly similar with others firms. Although their product is slightly similar with other firms, yet they also didn’t lose their loyal customer, so the demand of curve for Cadbury is slightly shifting to rightward. Besides that, I had discussed some of the determinants that affected demand curve which influence the demand curve shifted to rightward or leftward.  It is also affected the elasticity of demand in short-run and long-run. Lastly, there is also the determinants of elasticity in inelastic have been used in this monopolistic competition market.

Reference

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