Introduction

Established markets generate intense competition during which new

and innovative marketing strategies are required and new and
existing products are developed.

As a market develops, consumers become more experienced and

discerning and look for more benefits from the products they
choose. Although some organisations' products may appear
unchanged at this developed stage of a market, the more successful
businesses re-work existing brands and continue to develop new
ones to meet changing consumer needs.

The development of strong brands has always been a feature of the

confectionery market.

Background to the confectionery market

Per capita confectionery consumption in the UK is among the
highest in the world, exceeded only by Ireland and Denmark.
Chocolate confectionery accounts for around 70% of sales value in
the UK market, with sales of sweets (sugar confectionery) at around
30%.

Historically, the chocolate confectionery market has been

characterised by the dominance of a number of well established
brands, such as Cadbury's Dairy Milk, Mars Bar and Kit Kat.

Although some brands enjoy a rich heritage, the key need in a busy
and developed market sector is innovation, not just of existing
brands but also in the development of completely new brands.
Brand-led innovation is a vital component in the growth of this
market as it enables organisations to build competitive advantage.
Over recent years, competitors in the chocolate market have made
significant investments in new product development. Indeed, over
15% of volume sales in the last ten years have been generated by
new products. For Cadbury, this figure is even higher, at 20%, with
new brand launches such as Wispa Gold and Time Out.

This case study focuses on the launch of Cadbury's Fuse. In the face
of strong competition from well-known brands in an already busy
market sector, the launch of Fuse represented a significant
investment in a new brand.

An overview of Cadbury Schweppes

Cadbury Schweppes is a global business which manufactures,

markets and distributes branded products in over 200 countries. It
aims to provide pleasure, taste and enjoyment through the
manufacture and marketing of a wide range of beverage and
confectionery brands sold to consumers of all ages.

Cadbury Schweppes employs over 40,000 people worldwide. The

Group's strategy is to increase profitability, brand strength and
volume on a global basis in its two business streams, beverages and
confectionery, through a combination of internal growth, targeted
acquisitions and joint ventures. In the beverages business, Cadbury
Schweppes is currently No 3 in global soft drinks, where it licenses
its brands to bottling partners in 92 countries and has its own or
joint venture bottling operations in a further 14 countries.

In the confectionery business, Cadbury Schweppes is the world's

fourth largest supplier of chocolate and sugar confectionery. The
Group has manufacturing plants in 25 countries and sales in a
further 165. Cadbury Limited is Cadbury Schweppes' UK
confectionery operation and it is responsible for the production of all
of Cadbury's best-known UK brands.

Market Research

Market research is a process designed to link managers to

consumers through information. It is used to identify opportunities
and make better informed decisions about products which have
future market potential.

Market research has revealed that snacks play more of a functional

role than one of pure indulgence: they are often a meal substitute.
Research also shows that successful snack brands in the
confectionery category tend to have more 'foody' values and often
contain ingredients such as cereal, wafer, biscuits, peanuts and fruit
to break up the chocolate delivery.

Cadbury's philosophy is to continue as a driving force in the

confectionery market, and thus constantly analyse its offerings for
consumers. The core objective of Cadbury's innovation programme
is to generate incremental volume for the company and achieve the
vision of market leadership in every segment in which it operates.
The role of innovation is critical as it allows Cadbury to develop
ahead of its competitors in those areas of the market which are new
or growing.

Product development

Cadbury set out two objectives for the development of Fuse:

1. to grow the market for chocolate confectionery;

2. to increase Cadbury's share of the snacking sector.

The 'Fuse' concept was developed after market research identified

the growth of snacking and a definite gap in the market for a more
chocolatey snack. A number of ingredients were devised and tested
following a survey which questioned consumers about their
snacking habits and preferences. A research and development team
was then asked to develop a number of product recipes which
addressed the needs expressed by consumers.

Not all products successfully emerge from the product development

phase. Research and development involves combining various
ingredients to develop potential new products. Considerable
development time was spent on Fuse, carefully engineering the
ingredients in order to deliver the right balance of chocolate, food
elements and texture. More than 250 ingredients were tried and
tested in various combinations before the recipe was finalised.

Any new product in the snacking sector must establish points of

difference from existing products within the market - thus creating a
unique selling proposition (USP) i.e. a product with unique appeal
which is not shared by any of its competitors. Whereas other
confectionery snacking products focus primarily upon ingredients,
with chocolate used only to coat the bar, the product developers
decided to use Cadbury's chocolate to ''fuse'' together a number of
popular snacking ingredients such as raisins, peanuts, crisp cereal
and fudge pieces.

Early consumer testing

As products are developed, they must be tested to ensure that

consumers would be willing to buy them. As approximately 85% of
all new products launched into the grocery and allied trade sectors
fail in their first year, extensive research helps to reduce the risk of
launching a new product into an already competitive market. Fuse
went through two extensive 'in home placement' tests. The results
of these tests were multiplied into repeat purchase and purchase
frequency figures to allow Cadbury to anticipate the volume of bars
required for the launch of Fuse and post-launch.
 Pack design

Packaging enables a manufacturer to convey both the tangible and

intangible attributes of a product. The packaging for Cadbury's new
product sought to position it as a unique, exciting and delicious
chocolate snack which would stand out from its competitors. It was
important to emphasise the qualities and appeal of Fuse whilst at
the same time reinforcing that it was a Cadbury brand.

The packaging achieved impact by using bright, fiery colours for the
product name and contrasting them against the deep and instantly
recognisable 'Cadbury purple', which communicated the
manufacturer's heritage. The colours were also used in a gun
powder style to suggest an explosive taste. The vibrancy of the
design aimed to differentiate it from other products in the sector so
that it would have an immediate point-of-sale impact both on-shelf
and in store display units.

Three different packaging formats were developed in order to

maximise the various multi-purchase opportunities available. The
key pack size was the single bar, designed to entice trial and to
encourage repeat purchase. The 'treat size' and the multi-packs
were aimed at families.

Brand name

Like packaging, brand names play a critical role in the success of a

product, by helping to create a product's 'personality'. The new
product aimed to have broad appeal to 16-34 year olds, although it
was primarily targeted at 16-24 year olds. The name Fuse was
chosen to communicate the fusion of snacking ingredients. The logo
was bright and fiery with a mock fuse - alight in several places -
which aimed to give the new bar the quirky and humorous style
which Cadbury sought to appeal to this younger target market.

Further consumer testing

Testing is vital throughout the entire product development process.

It helps to provide valuable information that can be used to fine-
tune the product and minimise many of the launch risks.

In research, Fuse scored higher for texture, 'interesting eat' and

combination of ingredients, than its competitors and achieved the
highest rating ever for a new Cadbury product - 82% of consumers
rated Fuse as excellent or very good and 83% said they would buy it
regularly.

The launch strategy

The launch strategy of any new product is critical. Cadbury has two
targets for its products - trade customers who stock the product and
consumers who buy it. In recent years, product launching has
become an art which can make or break a product. A successful
launch makes potential customers aware of the new product and
keen to try it.

Before consumers could try the product, however, it was important

for Cadbury to gain the support of its trade customers. Retailers had
to view it as helpful in encouraging customers to visit their shops. If
the product had failed to interest retailers and distributors, the costs
of investment would not have been met and they would not have
stocked the product.

Cadbury conducted one-to-one briefings with over 70 key trade

customers. This helped Cadbury build awareness and commitment
to the launch and obtain significant orders for in-store displays and
merchandising ahead of the launch date. The trade commitment
was reflected in high levels of display support in store during the
launch.

Traditionally, new confectionery products are initially launched in

one region of the country, in order to gauge the product's success,
before moving on to other regions over a period of time. Time Out
and Wispa Gold, for example, were launched in this way. The
commitment to the success of Fuse was so great, however, that it
was Cadbury's first completely national launch for 20 years.

There were certain key requirements to the co-ordination of the

launch:

Secrecy had to be paramount!

Marketers who had identified the gap in the market had to work
closely with individuals from research and development as well as
other external agencies.

Manufacturing operations, in conjunction with marketing and

finance, had to evaluate a new factory investment for Board
approval.

Having a catchy 'hook' for a new launch helps to make consumers

notice the product. Cadbury and its trade customers managed the
first availability of Fuse around one day, Tuesday 24th September,
aptly christened 'Fuseday'. This involved tight management of stock
distribution, with more than 40 million bars being moved from
Cadbury depots into the trade only a few days prior to the launch
date.

Press releases were tailored to specific audiences. In each case, a

strict embargo was imposed to ensure that the impact of Fuseday
was not diluted. The only exceptions were briefings with The Grocer,
and Marketing (trade publications) and The Daily Telegraph, which
reviewed the product in its business pages.

Public relations (PR) support was substantial. It told the story of

Fuse, explained that it had taken five years to develop, involved an
investment of £10 million, the development of a new plant at
Somerdale near Bristol and £4 million in advertising costs. The TV
campaign and PR campaign were so successful that Cadbury was
under pressure to meet repeat orders post-launch!

Post-launch results

After a new product launch, it is important to analyse whether the

product has managed to meet its launch objectives. During 1996,
the chocolate market grew by 9% with 19% of this growth
attributable to Fuse - a single brand which had only been available
for a quarter of the year.

One way of evaluating the effectiveness of advertising and

promotional campaigns is to ask market research volunteers to
identify advertisements using prompts in a recall test. The Fuse
launch had created massive awareness of the new brand, achieving
greater prompted awareness than the celebrated Wispa launch.
Within just one week of the launch, a record 40 million Fuse bars
were sold into the trade and within eight weeks of sale, Cadbury's
Fuse was the UK's favourite confectionery line, outselling both Mars
Bar and Kit Kat by 20% and capturing an astonishing 6.5% of hand-
held confectionery product sales. It had also contributed
significantly to Cadbury's growth in 1996. The launch had exceeded
expectations, with consumers buying 70 million Fuse bars within the
first three months of its launch.
Cadbury's competitors reacted to the success of Fuse by increasing
their own new product activity.

Conclusion

This case study has examined Cadbury's ability to use innovation in

a developed and crowded market-place. There were three clear
elements in this process:

1. the use of consumer research to identify a significant market

opportunity;
2. product research and development combined with extensive
consumer testing;
3. massive trade and consumer hype generated by a national
launch.

Snacking remains the big opportunity to expand the chocolate

market even further. As Fuse moves through the growth phases of
its product life-cycle, the next stage is to move it into the 'super
brand' league. As it does so, the key requirement will be to maintain
the product's momentum by continuing to develop innovative
approaches to marketing it to consumers.

TASKS
1. What were the objectives behind the marketing strategy for Fuse?
2. Explain the marketing mix of Cadbury’s Fuse in detail in your own
words
3. What part of the product life cycle is Cadbury’s Fuse in?
4. What was revealed through market research?
5. Evaluate the success of the Fuse marketing strategy?