The Real Taste Of Life

But if Bakshi's original turnaround strategy had been amazingly successful, this time the die is clearly loaded against him. In the one year that he was away, Cadbury India had been caught in a strange state of drift, virtually obliterating a lot of the good work that Bakshi and his team had put in from 1992 onwards. So much so that the myriad pieces of Cadbury's much-touted recipe for rejuvenation widely described as the marketing success of the nineties had been falling apart.

After two years of heady growth, marketers at Cadbury had become supremely confident that their long-term strategy of expanding the Rs 350 crore chocolate market was well on course. But last year, Cadbury's volume growth simply petered out, declining by as much as 5 per cent. Volumes on lead brands Cadbury Dairy Milk, 5 Star and Gems were down too, while fighter brand Perk begun gradually yielding share to Nestle's Kit-Kat. Kit-Kat, on its part, grew by as much as 36 per cent in one year, attaining volumes of 3,000 tonnes in calendar year 1997. What's more, by March '98, Kit-Kat is expected to reach Cadbury Dairy Milk volumes, which hover around 3,500 to 3,700 tonnes currently. Sources say that Perk managed 2,200 tonnes of sales in 1997.

 

Given that the chocolate confectionery business contributes 80 per cent of Cadbury's turnover, the reversal in the brand fortunes is mirrored in the financial performance. The full consequences of all the developments of last year are not yet known, since the annual results for 1997 have still not been tabled before shareholders. But if the first half of '97 is any indication, the evidence of a full-blown crisis is everywhere. Net profits were down 56 per cent to Rs 6.18 crore, even as sales went up 18 per cent to Rs 153.12 crore.

So much so that the wisdom behind the long-term strategy is being called into question. But if insiders and sources close to Cadbury House are to be believed, Bakshi is wasting no time in straightening things out. Says one such source, "Even as MD, Bakshi's main preoccupation will be to galvanise the somnolent marketing function. We are already discovering the strategic orientation that was missing since last year."

Even as Bakshi begins reinventing the CDM magic the second time around, The Strategist revisits the main planks of the turnaround strategy and the dilemmas it now faces.

Hypothesis 1: The key task is to increase the width of consumption by lowering attitudinal barriers to chocolates. Depth of consumption would take care of itself.

In 1992, when Cadbury's began studying the category, the signals were apparent. For one, penetration was low, averaging about 200 gm per capita annual consumption as against 5 to 6 kgs in developed markets.

So with a 70 per cent market share, Cadbury had very few options but to push up the width of consumption. In other words, get more people to consume chocolates. That's because while children were major consumers, focusing on depth was ruled out because parents were actively cutting down consumption. So unless the blocks were removed, there was little hope of increasing depth. The trick was to get the adult to eat chocolates himself, so that the child too could eat it. The first task was, therefore, to shift adults into the chocolate mode.

But the task was complex because motivational research showed chocolates were perceived as a product meant for children. This was unlike in the West where chocolates straddled a continuum from boutique brands (that pander to raw indulgence) to purely functional snacking option. Per capita consumption was very high in those markets where chocolates had transited to the consumer's snacking repertoire. Clearly, snacking and functionality were key to growth.

But in India, making that transition was the difficult task. The crux of the problem was ingrained attitudes, which in turn shaped behaviour in the category. Much of the restrictive behavioural and attitudinal patterns in the category was Cadbury's own doing. Chocolates, led by CDM, had inadvertently been positioned it as a product parents bought for kids. It had been endowed with values like love and sharing, parental affection, and reward. Of course, this had been instrumental in forging a relationship with the consumer. But it had willy-nilly relegated the product to a special occasion item, thereby curtailing depth of consumption.

A typical ad for CDM would show parents bringing home a chocolate for the child. It never showed neither a child nor an adult buying it for himself. Instead, a parent buying it for the child and essentially giving it either as a reward, and sometimes inadvertently, an attempt to make up, or assuage guilt. The communication taglines like 'Sometimes Cadbury's can say it better than words' or 'Nothing but the best will do' were very effective advertising in their own right, but in hindsight, it lacked a long-term strategic direction.

The advertising ended up conditioning adults into feeling guilty or embarrassed about eating chocolates on their own, or in a social setting. It wasn't as if adults didn't have chocolates. But at most, they'd have a piece or two from the child. There were not only limits to the quantum of chocolates a parent had, but the parent also constrained and controlled how much of it would spoil teeth, upset stomach or add weight. As a result, adults were not only not indulging in it, but they were also curtailing consumption.

Flashpoint!

From the second half of 1994, when the chocolate market began growing at 25 per cent per annum for the next three years, it seemed as if Cadbury has fulfilled its task of unshackling the category.

Today, that growth has all but petered off, with volumes declining by 5 per cent. The burning issue inside Cadbury House is whether its strategy actually widened usage by changing consumer attitudes towards chocolates. There is no data to support the hypothesis that the spurt in growth has come from new consumers who entered the category. Besides, all the pre-launch and post launch qualitative research was done among consumers of chocolate, not among non-users. There is a school of thinking that believes that it could very well have been existing heavy users who had been nudged by the new communication to eat more often. In other words, the strategy may have willy-nilly increased depth of consumption.

So now, should Cadbury maintain its focus on the long-drawn task of increasing width with Cadbury Dairy Milk, given that the task of changing attitudes would take both time and money. Or rather concentrate on addressing the issue of depth of consumption, what with newer segments like snacking spurring growth?

Besides, in their endeavour to widen usage, Cadbury had made a determined bid to seek growth in the smaller towns by intensifying distribution. The number of redistributors were doubled. The number of outlets that stocked chocolates were expanded by over 60 per cent to 2,50,000 outlets, so much so that almost 95 per cent of the urban population was now covered through an expanded distribution base.

So was it likely that the growth had come as a direct result of distribution extension?

Hypothesis 2: Dismantle the existing segmentation variables like age, heaviness of usage or socio-economic classification, which cramped growth. Evolve a new segmentation variable: ego states.

What did chocolates mean to consumers? When Cadbury's research team did a semantics study, it was apparent that whenever consumers mentioned chocolates, it was always linked to love, emotion, magic and romance. Clearly, it was an emotion-led category. So while CDM stood for core rational values like wholesomeness, purity, taste and goodness of milk, the brand's sustained positioning had enveloped the core brand identity with dollops of emotion.

But Cadbury knew that if they wanted to re-establish the category and grow volumes, the key was to find a rational benefit. The real challenge was to find a rational hook in the brand and the category, where the rational basis had not effectively been established.

How could they cover this huge chasm between the emotional and the rational? It didn't make sense to jettison every link with the past at one go. So in reconstructing the new value proposition, Cadbury's chose a middle path. It dropped the sharing and caring element, but retained the family context. The logic? That's because love and sharing made the productspecial, and hence, not everyday, which was not in sync with

Cadbury's new direction of stepping up consumption within the family.

Although it came through after many hiccups, The Real Taste of Life campaign was a big breakthrough. Transactional analysis played a key role in assessing consumer responses. Adults in their role as parents behaved very differently from adults in their role as adults. For instance, although parents would typically forbid their kids to have chips, but on their own they'd gorge without a fuss.

Everytime the adult was shown in the context of his role as a parent, all his cognitive preconceptions about the product would come to the fore. He'd think about the reasons why, and the blocks would come up, which meant that consumption would happen in a measured way. The key was to tap the child ego state in the adult, the typical response would be desire, spontaneity, and instant gratification. Together with that, Cadbury's research discovered that the consumer's value system too was undergoing change. Collectivism was giving way to individualism. Self expression was rapidly overshadowing the pre-nineties values of filial love or family being sacrosanct.

At last, Cadbury's had hit upon a route to universalise the category. Segmentation by ego state could unshackle consumption that had been narrowly compartmentalised by age. The key was to extend this value proposition into the realm of self expression.

The first ad, internally referred to as the Blockbuster Ad, was a montage which brought out this free child old man kicking the ball, pregnant woman craving, young girls breaking into a run, boy throwing chocolate at bus. This was followed by the Cricket ad, where the girl breaks into a dance.

Flashpoint!

Since it was an impulse category, Cadbury could not rely on same advertising stimulus for a long time. The key was to keep inventing the same spark of spontaneity. But by the end of 1996, O&M's creative team had begun to find it diffic ult to recreate the same magic in its advertising. Apart from the first two ads the Blockbuster and the Cricket ad none of the subsequent ads were able to make a dent. Says an senior advertising person, "Its's the classic problem of being unable to extend a Big Idea."

The third ad referred to as the 'Bird' ad was run in Calcutta was later withdrawn, because it did not gel with the brand personality. In 1996, Cadbury's released the bicycle commercial. But post launch research showed that the ad was perceived as contrived. People could not relate to the bucolic surroundings that seemed more like an English countryside rather than an Indian setting.

Yet since the brand's identity needed to stay contemporary and fresh, the ad was aired for sometime.

By the end of 1996, fatigue seemed to have set in. The first hint of a slowdown in volumes had begun to manifest itself. Through the year 1997, no major initiative on CDM was made, except for the Independence campaign, which was largely a tactical response. It seemed as if the Real Taste of Life had reached the end of the road.

Hypothesis 3: Evolve a brand system where CDM plays the role of changing attitudes, while the other brands in the portfolio drive the shift to functionality.

While CDM with its Real Taste of Life campaign, which broke in early 1994, was meant to steer the category towards self expression, spontaneity, and onto a more universal plane, the first step towards functionality was left to 5 Star.

Internationally, 5 Star was a hardworking brand, an energy-giving and relatively filling snack. It's nearest equivalent, Mars, had pegged its communication world-wide on 'all day energy, work and play'. But in India, Cadbury's had chosen a different tack for 5 Star, as a 'togetherness' bar, targeted at teenagers, symbolising teenage romance and teenage consumption.

In the second half of 1994, Cadbury repositioned 5 Star. Even though the brand would ward off the impending launch of Mars in India, Cadbury decided not to rob all the emotional overtones of the brand and take it into the purely functional plane. As a result, came the 'Reach for the Stars' campaign, positioning 5 Star as the body and mind charger.

The real stride into the snacking segment came with Perk in September 1995. Launched at the same time as Kit-Kat, Perk was positioned as a light snack geared to subdue the first pangs of hunger. Cadbury's research showed that chocolates didn't figure in the consumer's choice set, when it came to snacking. Yet there was a discernible opportunity among teenagers who didn't necessarily eat meals at a given time, and who eat a lot outside the house. Therefore, the task was to get them hooked to chocolates.

'Thodisi Pet Pooja' sensitised people to the fact that you could actually eat chocolate more often. Unmindful snacking was in, but the trick was to channelise dairy milk equity and shift its target audience onto teenagers with a new Smart campaign.

Flashpoint!

As it turned out, the Gems initiative meant to widen its franchise beyond kids drew a complete blank. While the Smart campaign got rave responses, the offtakes simply did not materialise. In hindsight, at a time when the non-chocolate confectionery market was being bombarded by new product launches, shifting Gems from the kiddies slot may have been a monumental mistake. (see The Strategist of January 13,'98). Late last year, Gems once again returned to its original position (but reinforced as Chocogems), with a new campaign 'Masti Chale Dandanadun' meant for kids. And with a strong equity backing it, Eclairs, on the other hand, grew steadily in the toffee segment.

Meanwhile, Perk along with Kit-Kat, backed by heavy ad spends, grew by leaps and bounds. But there were two danger signals. One, Perk's growth came largely at the cost of 5 Star. Says a source, "Kit-Kat was seen as something international, while Cadbury's Perk was perceived more like an extension of an Indian 5-Star."

Meanwhile, Perk's offtake began to slow down by the middle of 1997. And by the end of 1997, Kit-Kat had taken the lead in virtually all the major markets, except for Mumbai. Explains a research person, "Kit-Kat's product format also helped to spur consumption because the finger product format allowed one to eat one finger, store the rest for a later use. Besides, the finger product format allowed the brand to be shared among the family."

With Kit-Kat continuing to grow aggressively, Cadbury is caught in a dilemma. Its pillar brands, CDM, 5 Star and Gems were under volume pressures, while Perk had to be supported to keep up its fight against

Kit-Kat. Given that Kit-Kat was a well-known international brand and with a discernibly superior on taste, Perk had begun to cede market share to Kit-Kat. As a challenger, Kit-Kat's main preoccupation was picking up market share. Since Nestle had put all its support on Kit-Kat, its share of voice on media was understandably

high, as against Cadbury, which had to spread its media spends across four or five key brands. Clearly, the snacking market that Cadbury had

felt was underdeveloped in 1994, had come of age. But it needed a strong and well differentiated product to take on Kit-Kat.

The recent launch of Picnic is meant to strengthen Cadbury's snacking repertoire. At Rs 14, Picnic is a heavier snacking option, coated with wafers, raisins and peanuts. Along with Perk, Cadbury is now pushing forward Relish, though it is not supported in media, it is increasingly being given greater merchandising support. The idea is to use its wide product range to crowd out Kit-Kat from shop shelves and also give consumers greater taste and variety. That way, Cadbury will have a brand in Relish, Perk and now, Picnic which explores the entire price continuum. The timing of the Kit-Kat 4+1 offer is significant, since it is meant to block out Picnic, so that brand trials are slowed down. Meanwhile, the launch of Cadbury's Truffle late last year was meant to offer a new taste experience for lapsed CDM die-hards, but the results of the launch are not yet clear.

Five Star, which had been struggling to find a relevant expression for energy, has recently unveiled yet another attempt to give the brand a more distinct identity. The "My Energy Zone" campaign is Cadbury's last ditch effort to shore up the brand's fortunes, before Mars moves into the Indian market.

As for the flagship CDM, Ogilvy & Mather, Cadbury's ad agency, is working overtime on a new brief from Bakshi to rejuvenate the brand. With the entry of Perk and Kit-Kat in 1995, it is likely that it may have affected CDM's initiatives because the consumer's attention may have diverted by the excitement and variety in the marketplace.

Of course, insiders in Cadbury House affirm that a lot of the trouble on CDM has a lot to do with the price hike in quarter three of 1997, when the price went up from Rs 10 to Rs 13, apart from the fact that the Real Taste of life campaign lost its magic. With chocolates already perceived as expensive in relation to other impulse categories like wafers, soft drinks and mithai, the price hike tended to distort the price value equation further. The obvious negative fall-out was on the more profitable bigger packs. So while he cannot do much about the price hike, Bakshi is addressing the most urgent task of revitalising CDM's advertising.

But what are the routes open? The Strategist understands that since CDM is the only pure chocolate in the Cadbury portfolio, it will have to keep up its generic role of propping up the category saliency. But in the evolved chocolate markets, primarily in the metros, CDM will increasingly find consumers graduating to functional offerings like Kit-Kat or Picnic. So CDM's primary focus will be to widen franchise in the smaller towns, where penetration is currently low.

From a neutral stance, CDM's new campaign will take on a more positive tone of voice. At a generic level, chocolates satisfy many needs: hunger satisfaction, mood uplifter, sweet tooth gratification and taste. Since hunger satisfaction has already been left to the countlines like 5 Star, Perk and Picnic, and given that taste is largely a category benefit, it is mood upliftment that O&M's creative energies will be trained on. But will that buoy up spirits inside Cadbury House? Stay tuned.n

(With reports from Iqbal Singh)