Edging Into Candies

It took more than a decade for chocolate major Cadbury to push its new project from the drawing board to the marketplace.

But when Googly, Cadbury's first brand in the crowded sugar confectionery market, finally made its debut last month, the motives were all too apparent. By the turn of the century, Cadbury hopes to lop off 10 per cent of the Rs 1,300 crore sugar confectionery market. And to do that, it hopes to leverage its large basket of brands from its Trebor range, a company that Cadbury acquired in the UK.

As such, to select its debut brand in India, Cadbury could have simply hand-picked a brand from the international range of sugar sweets, owned by its UK subsidiary, Trebor International. Instead, curiously, Googly has turned out to be a completely indigenous effort the product form, the advertising and the brand name are distinctly desi. (The closest that Googly comes to a product in the Trebor range is a hard boiled candy brand, Serbets.)

 

For many, Googly, a seemingly undifferentiated, vanilla plain hard boiled candy priced at 50 paise is a curious way to mark an entry into a market that's witnessed tremendous activity in the recent years with a host of value added products being launched in quick succession. Also, a host of players including Nestle, Warner Lambert, Wrigleys,and Agro Limen are bracing to cut up the large confectionery market.

But in reality, Cadbury business plan for its sugar confectionery division is led by its firm intent: to seat itself strongly in a market that's clipping at the rate of 25 per cent every year. Cadbury success squarely hinges on how well it can build a base for its sugar confectionery business. And that's exactly where Googly fits in.

The plan

As Cadburys sees it, the controlling stakes in the sugar confectionery market will depend on how quickly it can pick up volumes.

Much of that would depend on how Cadbury could get a grip on the market structure in the new business. When it looked at the various product segments within the confectionery market hard-boiled candies, lollipops, lozenges, digestive candies, mints and chews at 40 per cent, hard-boiled candies formed the largest chunk of volumes.

Also, there was another added factor. If it had to emerge as a powerful mass market player, its distribution reach for chocolates would not be enough. Growth in the confectioneries business would continue to come from the impulse business. So while chocolate distribution was largely limited to general stores and chemists, impulse led confectionery required a wider distribution width.

But to extend distribution wi-dth, Cadburys would have to be careful and pick a product that would lend itself to the task.That weapon: Googly.

The concept

When Cadbury studied the existing consumption profile of branded candies, it found a distinct skew towards children. Almost 50 per cent of consumption came from children, while 25 per cent comprised children and young adults and another 15 per cent were from adult consumption.

Much like chocolates, Cadbury found that candies too, were caught in an "identity trap." Over the years, candy communication had targeted at kids, so much so that adults were embarrassed to consume candy.

Taking a leaf from its recent experiences with Cadbury Diary Milk, Cadbury realised that there was a clear opportunity to legitimise spontaneous consumption of candy among adults. Typically, candy was bought largely on impulse or even as a option to recover change during a retail transaction. There were no set buying patterns, so much so that there were deemed to be merely time pass.

But the key was to position the candy with an universal appeal, so that it did not alienate any target group, be the adult or children. As a consultant explains, Candies positioned for young adults can very well draw in kids, as kids often like to imitate adults.

Although there was no brand loyalty in the segment, the key was to effectively differentiate itself from the commodity-like offerings from the high-volume, low margin unorganised sector. The key was to create a differentiated product with its taste experience, attractive pillow pack, imbue it with brand values, beef up shop-shout and market presence and support it with continued advertising spend.

To spur greater opportunities to buy, the packaging configuration too, was limited to just one candy, priced at 50 paisa each to differentiate itself from the largely commoditised candies which sold below 50 paisa.

Initially, in keeping with the market structure, Googly has been launched in two flavours: orange and lemon. The rationale: both these flavours jointly make up about 70 per cent of the hard-boiled sweet market. It is anticipated that as the launch gathers momentum, the company will launch newer flavours to keep the brand excitement going.

The unit price is of crucial importance. This is because, price hikes cause consumer dissonance. As a confectionery brand becomes more of a habit with the customer, he gets used to a specific price point. This impacts price-flexibility, which gets lost as it becomes difficult to raise prices every year by 6-7 per cent for such a coinage-laden product and if prices are raised to the next convenience coinage 75 paise it may result in a sizeable drop in volumes.

Cadbury is aware of the dangers. "We plan to hold on to the price line for the next two years," says Deepak Sethi, director (marketing & sales), Cadburys. Rough calculations show that in a 50 paise candy, more than 15 paise are for the cost of sugar a 30 per cent input. So if sugar prices are under pressure, then Cadbury would have no option but to raise prices. The only effective answer will be to try different pack configurations so that the volumes are not sacrificed.

Settling on the 50 p price point has meant that Cadburys margins are a shade lower than competition. For instance, the company is offering a dealer margin of 20 per cent, compared to the 10 per cent that it allows on chocolates. The 20 per cent margin band includes three types of pack configurations. For a 25 unit stringer of 125 units and a 500 gm pouch, the cost per dealer (CPD) is Rs 52.08. The one kilo display outer with a capacity of 250 units would have a CPD of Rs 104.17 per bag while the 100 gm pouch would be at a Rs 10.44 CDP and would offer a dealer margin of 15 per cent.

According to industry forces, dealer margins for a Boomer are 25 per cent while a Perfetti candy gives a 22 per cent dealer margin. Clearly, Cadbury is banking on its already strong market presence to swing the trades support.

What is unique about Googlys communication plan is that nowhere is the Cadbury connection played up. As the company sees it, although there is enormous heritage attached to the Cadbury brand name, which would rub off on the new brand, the Cadbury name is too strongly attached with chocolates to be associated with the new category. Hence, Trebor is being used as an umbrella brand.

The advertising platform

Googlys brand personality has been crafted keeping in mind the gaps in the market. All the while, confectionery advertising was invariably targeted at kids.

Most candy ads were either

too silly and used the ghastly kiddie route or they use the adult route but ended up becoming too product-centric.

Googly is refreshingly different. Explains Sonal Dabral, creative director, Ogilvy and Mather, Our brief was build the creative on the surprise platform, target it to the young market and those who are young at heart and break new grounds in confectionery advertising.

Young adults, according to researchers, have more purchasing power and so are more

prone to impulse buying. Also, Googly wants to project itself as a fun and trendy product for a contemporary generation. The

support: the powder-filling centre of Googly which lends an element of surprise while consuming the product.

The communication objective was to convey the element of surprise and therefore, the media options were not restricted. For instance, Cadbury's used outdoor effectively to launch the product with a series of teaser campaigns. A few samplers: Goli Barood! or Zabaan Sambhal Ke! with the strapline, Googly. A tangy, fizzy candy.

Being an impulse product, the merchandising strategy has been to use display-cum-dispensers. The company, in Mumbai, is also distributing free 1 kg PET jars to around 10,000 dealers to increase trade loads in KRAs (key result areas). Cadbury is using independent merchandisers who are being employed by its distributors. The material is supplied by the company. In Mumbai, all the 13 distributors are employing one merchandiser each at a monthly salary of Rs 2,500.

The distribution thrust

The key task is to revv up distribution coverage without costs going out of line. By expanding distribution width, Cadbury will also open up newer vistas for even its chocolate distribution, which has been difficult on its own. So once the distribution for confectionery is in place, it will be used to selectively funnel other products in the portfolio.

Today, Cadbury covers nearly 95 per cent of the urban population, through either direct or indirect distribution. The distribution plan would hinge on wholesale distributors as it proves to be more cost effective and would give the company an additional width of nearly 40 per cent over the current universe. However, it is virtually impossible to handle such a network directly as it would entail heavy overheads and a very intricate monitoring system. That is why, Cadburys chose the wholesaler route as it would not only limit

its costs but also give it

the flexibility in the

distribution chain.

The existing Eclairs distribution of the company did prove to be the benchmark for establishing Googlys own distribution channels. According to Sethi, the distribution plan for Googly is a two-phase approach. In the first phase, the company plans to cover the markets it is already present in with Eclairs.

If we take Mumbais example, Cadbury has 13 distributors who cover around 85 per cent of the city's distribution universe with Eclairs through nearly 17,000 outlets. Googly is currently being sold through around 73 per cent of these existing Cadbury's outlets. What the company aims to do with Googly is build up this base by at least 1.25 times and add another chunk of lower-level distribution to its network like panwallas, roadside kiosks which sell basic essentials like bread and butter and eventheatre canteens.

Taking a leaf out of its own experience for Eclairs, Cadbury's is using cycle salesmen for covering slum dwellings in Mumbai a largely untapped area by the organised sector. These salesmen would co-ordinate with the wholesale distributor and would get Rs 500 as a monthly salary plus a very small percentage from their sales.

The next phase of distribution would involve the launch of new products to beef up the product-portfolio. The strategy would continue to build inventory at the distributor level and then supporting it by advertising blitz to generate retail enquiries. Thus, the onus of pushing the product to the retailer would be on the distributor.

The end game

It is evident that Cadbury is prepared to build its sugar confectionery business bottom-up. Once Googly is in place, the chances are that Cadbury will draw on newer, sharply differentiated products from the Trebor range to introduce in the market. Market estimates suggest that Googly will aim at a turnover of about Rs 6-7 crore by the end of the first year.

However, the trick will be to keep the brand excitement from flagging and visibility in the marketplace running high. n

(With additional reporting by Sourav Chatterjee and Shishir Prasad).

It took more than a decade for chocolate major Cadbury to push its new project from the drawing board to the marketplace.

But when Googly, Cadbury's first brand in the crowded sugar confectionery market, finally made its debut last month, the motives were all too apparent. By the turn of the century, Cadbury hopes to lop off 10 per cent of the Rs 1,300 crore sugar confectionery market. And to do that, it hopes to leverage its large basket of brands from its Trebor range, a company that Cadbury acquired in the UK.

As such, to select its debut brand in India, Cadbury could have simply hand-picked a brand from the international range of sugar sweets, owned by its UK subsidiary, Trebor International. Instead, curiously, Googly has turned out to be a completely indigenous effort the product form, the advertising and the brand name are distinctly desi. (The closest that Googly comes to a product in the Trebor range is a hard boiled candy brand, Serbets.)

For many, Googly, a seemingly undifferentiated, vanilla plain hard boiled candy priced at 50 paise is a curious way to mark an entry into a market that's witnessed tremendous activity in the recent years with a host of value added products being launched in quick succession. Also, a host of players including Nestle, Warner Lambert, Wrigleys,and Agro Limen are bracing to cut up the large confectionery market.

But in reality, Cadbury business plan for its sugar confectionery division is led by its firm intent: to seat itself strongly in a market that's clipping at the rate of 25 per cent every year. Cadbury success squarely hinges on how well it can build a base for its sugar confectionery business. And that's exactly where Googly fits in.

The plan

As Cadburys sees it, the

controlling stakes in the sugar confectionery market will depend on how quickly it can pick

up volumes.

Much of that would depend on how Cadbury could get a grip on the market structure in the new business. When it looked at the various product segments within the confectionery market hard-boiled candies, lollipops, lozenges, digestive candies, mints and chews at 40 per cent, hard-boiled candies formed the largest chunk of volumes.

Also, there was another added factor. If it had to emerge as a powerful mass market player, its distribution reach for chocolates would not be enough. Growth in the confectioneries business would continue to come from the impulse business. So while chocolate distribution was largely limited to general stores and chemists, impulse led confectionery required a wider distribution width.

But to extend distribution wi-dth, Cadburys would have to be careful and pick a product that would lend itself to the task.That weapon: Googly.

The concept

When Cadbury studied the existing consumption profile of branded candies, it found a distinct skew towards children. Almost 50 per cent of consumption came from children, while 25 per cent comprised children and young adults and another 15 per cent were from adult consumption.

Much like chocolates, Cadbury found that candies too, were caught in an "identity trap." Over the years, candy communication had targeted at kids, so much so that adults were embarrassed to consume candy.

Taking a leaf from its recent experiences with Cadbury Diary Milk, Cadbury realised that there was a clear opportunity to legitimise spontaneous consumption of candy among adults. Typically, candy was bought largely on impulse or even as a option to recover change during a retail transaction. There were no set buying patterns, so much so that there were deemed to be merely time pass.

But the key was to position the candy with an universal appeal, so that it did not alienate any target group, be the adult or children. As a consultant explains, Candies positioned for young adults can very well draw in kids, as kids often like to imitate adults.

Although there was no brand loyalty in the segment, the key was to effectively differentiate itself from the commodity-like offerings from the high-volume, low margin unorganised sector. The key was to create a differentiated product with its taste experience, attractive pillow pack, imbue it with brand values, beef up shop-shout and market presence and support it with continued advertising spend.

To spur greater opportunities to buy, the packaging configuration too, was limited to just one candy, priced at 50 paisa each to differentiate itself from the largely commoditised candies which sold below 50 paisa.

Initially, in keeping with the market structure, Googly has been launched in two flavours: orange and lemon. The rationale: both these flavours jointly make up about 70 per cent of the hard-boiled sweet market. It is anticipated that as the launch gathers momentum, the company will launch newer flavours to keep the brand excitement going.

The unit price is of crucial importance. This is because, price hikes cause consumer dissonance. As a confectionery brand becomes more of a habit with the customer, he gets used to a specific price point. This impacts price-flexibility, which gets lost as it becomes difficult to raise prices every year by 6-7 per cent for such a coinage-laden product and if prices are raised to the next convenience coinage 75 paise it may result in a sizeable drop in volumes.

Cadbury is aware of the dangers. "We plan to hold on to the price line for the next two years," says Deepak Sethi, director (marketing & sales), Cadburys. Rough calculations show that in a 50 paise candy, more than 15 paise are for the cost of sugar a 30 per cent input. So if sugar prices are under pressure, then Cadbury would have no option but to raise prices. The only effective answer will be to try different pack configurations so that the volumes are not sacrificed.

Settling on the 50 p price point has meant that Cadburys margins are a shade lower than competition. For instance, the company is offering a dealer margin of 20 per cent, compared to the 10 per cent that it allows on chocolates. The 20 per cent margin band includes three types of pack configurations. For a 25 unit stringer of 125 units and a 500 gm pouch, the cost per dealer (CPD) is Rs 52.08. The one kilo display outer with a capacity of 250 units would have a CPD of Rs 104.17 per bag while the 100 gm pouch would be at a Rs 10.44 CDP and would offer a dealer margin of 15 per cent.

According to industry forces, dealer margins for a Boomer are 25 per cent while a Perfetti candy gives a 22 per cent dealer margin. Clearly, Cadbury is banking on its already strong market presence to swing the trades support.

What is unique about Googlys communication plan is that nowhere is the Cadbury connection played up. As the company sees it, although there is enormous heritage attached to the Cadbury brand name, which would rub off on the new brand, the Cadbury name is too strongly attached with chocolates to be associated with the new category. Hence, Trebor is being used as an umbrella brand.

The advertising platform

Googlys brand personality has been crafted keeping in mind the gaps in the market. All the while, confectionery advertising was invariably targeted at kids.

Most candy ads were either

too silly and used the ghastly kiddie route or they use the adult route but ended up becoming too product-centric.

Googly is refreshingly different. Explains Sonal Dabral, creative director, Ogilvy and Mather, Our brief was build the creative on the surprise platform, target it to the young market and those who are young at heart and break new grounds in confectionery advertising.

Young adults, according to researchers, have more purchasing power and so are more

prone to impulse buying. Also, Googly wants to project itself as a fun and trendy product for a contemporary generation. The

support: the powder-filling centre of Googly which lends an element of surprise while consuming

the product.

The communication objective was to convey the element of surprise and therefore, the media options were not restricted. For instance, Cadbury's used outdoor effectively to launch the product with a series of teaser campaigns. A few samplers: Goli Barood! or Zabaan Sambhal Ke! with the strapline, Googly. A tangy,

fizzy candy.

Being an impulse product, the merchandising strategy has been to use display-cum-dispensers. The company, in Mumbai, is also distributing free 1 kg PET jars to around 10,000 dealers to increase trade loads in KRAs (key result areas). Cadbury is using independent merchandisers who are being employed by its distributors. The material is supplied by the company. In Mumbai, all the 13 distributors are employing one merchandiser each at a monthly salary of Rs 2,500.

The distribution thrust

The key task is to revv up distribution coverage without costs going out of line. By expanding distribution width, Cadbury will also open up newer vistas for even its chocolate distribution, which has been difficult on its own. So once the distribution for confectionery is in place, it will be used to selectively funnel other products in

the portfolio.

Today, Cadbury covers nearly 95 per cent of the urban population, through either direct or indirect distribution. The distribution plan would hinge on wholesale distributors as it proves to be more cost effective and would give the company an additional width of nearly 40 per cent over the current universe. However, it is virtually impossible to handle such a network directly as it would entail heavy overheads and a very intricate monitoring system. That is why, Cadburys chose the wholesaler route as it would not only limit

its costs but also give it

the flexibility in the

distribution chain.

The existing Eclairs distribution of the company did prove to be the benchmark for establishing Googlys own distribution channels. According to Sethi, the distribution plan for Googly is a two-phase approach. In the first phase, the company plans to cover the markets it is already present in with Eclairs.

If we take Mumbais example, Cadbury has 13 distributors who cover around 85 per cent of the city's distribution universe with Eclairs through nearly 17,000 outlets. Googly is currently being sold through around 73 per cent of these existing Cadbury's outlets. What the company aims to do with Googly is build up this base by at least 1.25 times and add another chunk of lower-level distribution to its network like panwallas, roadside kiosks which sell basic essentials like bread and butter and eventheatre canteens.

Taking a leaf out of its own experience for Eclairs, Cadbury's is using cycle salesmen for covering slum dwellings in Mumbai a largely untapped area by the organised sector. These salesmen would co-ordinate with the wholesale distributor and would get Rs 500 as a monthly salary plus a very small percentage from their sales.

The next phase of distribution would involve the launch of new products to beef up the product-portfolio. The strategy would continue to build inventory at the distributor level and then supporting it by advertising blitz to generate retail enquiries. Thus, the onus of pushing the product to the retailer would be on the distributor.

The end game

It is evident that Cadbury is prepared to build its sugar confectionery business bottom-up. Once Googly is in place, the chances are that Cadbury will draw on newer, sharply differentiated products from the Trebor range to introduce in the market. Market estimates suggest that Googly will aim at a turnover of about Rs 6-7 crore by the end of the first year.

However, the trick will be to keep the brand excitement from flagging and visibility in the marketplace running high.

(With additional reporting by Sourav Chatterjee and Shishir Prasad).

The distribution plan for Googly is a two-phase approach. In the first phase, the company plans to cover the markets it is already present in with Eclairs.