Nestle Case

Advertising and promotion

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The importance of brandsymbolism in this category is very high, as the rationalityof buying decision is very low. Since this category doesnot satisfy any immediate functional need, the consumerslook to products for some rewards which may be social,emotional etc. By attaching unique emotional values to itsbrands CIL is consistently able to maintain around 70-80% of market share. Recently, by changing the image of CDM chocolate CIL was able to provide a brand, which isconsistent with self-image of the new target segment, andeven successfully enhance its self-image.

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Visibility - for an impulse purchase

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Chocolates arelargely an impulse purchase where the consumer makesthe decision most often than not when he sees theproducts displayed at the retail point. A recent in-depthsurvey carried out by Cadbury showed that more than35% of the total sales of chocolates are on impulse. Thusvisibility will surely spur the purchase of chocolates.Unfortunately, storing in refrigerators defeats this verypurpose. Cadbury and Nestle tackled this issue by1.buying shelf space in the retail outlets.

having display containers analogous to the Pepsiconcept of 'visicoolers'.3.attractive packaging in order to grab consumer attention

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Ability to bear negative effect of regulatory factors:

Various

government policies and regulatory factors haveaffected this industry from time to time. High excise duty(increased to 27.5% in 1992-93) is a major impedingfactor in breaking price barrier. Many times cocoa (basicraw material) has to be imported at high rates of importduty. This also affects the price structure of thesecompanies negatively. In summer months, governmentusually bans selling of milk for purposes other thandrinking. It also affects availability of the product.Although various entry barriers like government licensesetc. have been relaxed, exit barriers in terms of lack of any exit policy still exist