VOLUME 03BEACONOCT 2015

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VOLUME 03BEACON ISSUE 10OCT 2015

ContentsABOUT US

OUR TEAM

INDUSTRY ANALYSIS

COMPANY ANALYSIS

BRAND ANALYSIS

CONCEPT OF THE MONTH:THE HALO EFFECT

EVENT REPORT:CONVERGENCE’15

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OUR PRESENCE

ABOUT US

VISION

The SIMCON - SIMSREE consulting club is an initiative started in 2012 for those students in pursuit of excellence in management consulting and strategic management. Aimed at creating awareness among the students about consultancy as a discipline, the club strives to maintain strong relations with top consultancy firms and provide platform to craft highly skilled & competent consultants from SIMSREE. The club is a resource for information about consulting and a place for students to obtain real-world consulting experience.

SIMCON provides an avenue of interaction among faculty, students and alumni through competitions, live projects, guest lectures, and conclaves. For this purpose the club has also been publishing its monthly newsletter – BEACON (BE A CONSULTANT) and maintains a FACEBOOK PAGE where latest news and development in the consulting industry are posted.

MISSIONTo create awareness amongst the students about consulting industry & its latest trends.

To maintain strong relations with top consultancy firms.

To provide platform to craft highly skilled & competent consultants from SIMSREE.

To provide exposure to students via competitions, live projects, guest lectures & conclaves.

Contributions invited:To make this feature a successful effort, we seek continued involvement and contribution from our readers, that is YOU. We invite articles, research papers, and trivia on themes related to consulting. Be it industry news, consulting trends, a joke, a cartoon or feedback, we are eager to hear from you. So go ahead, do your research, pen down your thoughts and mail your entries to simcon.simsree@gmail.com.

Best Regards,SIMCON - SIMSREE CONSULTING CLUB

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OUR TEAM

SANANDAN DESHPANDE

NIKHIL RAO

AMEYA MAHABAL

CHITRA WANI

deepesh jethwani

prathamesh indani

Sushil Gurav

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OUR TEAM

ARPIT agrawal

ASHAY DHURI

HUZEFA BODABHAIWALA

KARAN CHOPRA

NAMAN CHANDAK

praCHI KORE

SARANG KULKARNI

YOGESH MOHATA

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PAINT INDUSTRYINDUSTRY ANALYSIS

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Paint Industry OverviewThe Indian Paint Industry began over a 100 years ago with the setting up of Shalimar Paints in Calcutta(now Kolkata) in 1902. After World War II many manufacturing facilities were started by local entrepreneurs. Currently the Paint industry in India is estimated to be around Rs 40,000Cr.

Paint is made up of four basic ingredients i.e. pigment, resin, solvent and additives. The types of paints available in the market and their utility are:

• Acoustic Paint: Specially designed for acoustic tiles

• Alkyd Resin Paint: Good trim, doors, faux finishes and other maximized use areas

• Drip less Paint: This paint is thicker and is most suitable for application on ceilings

• Latex Paint: Good for applicability and it dries much quickly & easier to wash

• One-Coat Paint: It is the more expensive version of the latex and alkyd paints and is mostly chosen for surfaces that require flawlessness in color

• Primers: Paint used in the initiation for all interior paint works

• Rubber-Base Paint: This is best for concrete and bricks

• Textured Paint:  If need is to cover any flawed surface in your house get this paint. It works well on ceilings

Paints can be classified as Decorative Paints & Industrial Paints:

putties etc. Decorative paint segment comprises 70% of the $2 billion Indian Paint Industry. Asian Paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment.  Industrial Paints

Three main segments of the industrial sector include automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment. The automobile sector contributes to 50% of the revenues in the industrial paints segment.Paint Industry SizeIndia has more than 20,000 outlets in operation, probably the highest for any country. 30% to the paint industry revenue in India is accumulated from Industrial Paints. The size of the Indian Paint industry is around 940 million litres and is valued at approximately $2 billion. The organized sector comprises 54% of the total volume and 65% of the value. In the last ten years, the Indian Paint Industry has grown at a compounded annual growth rate (CAGR) of 12-13%.The market for paints in India is expected to grow at 1.5 times to 2 times GDP growth rate in the next five years. With GDP growth expected to be over and above 7% levels, the top three players are likely to clock above industry growth rates. There are high volumes of low cost distempers sold in India, which amounts to approximately 200,000 tons per annum at an average cost of Rs35 per kg ($0.88) at the present rate.

Top leading Companies• Asian Paints India: Asian Paints is one of the

best discretionary plays on macro recovery given that paint volumes surge a healthy 1.5‐2.0x GDP. Moreover, decisive policy measures by the new business‐friendly government will spur urban demand. Diversification into water proofing, modular kitchens and bath fittings places the company in a sweet spot to corner higher wallet share (Masco Corp in US has done this successfully). With 22% EPS CAGR, 347bps RoCE spurt over FY14‐17E and metamorphosis into a home décor company, its valuations will remain high.

• Kansai Nerolac: Kasai Nerolac is the third largest decorative paint company in India in terms of

Decorative PaintsMajor segments in decorative include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary products such as primers,

PAINT INDUSTRYINDUSTRY ANALYSIS

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market share. The company has good brand strength, particularly in the interior paints segment with brands like Nerolac Impressions, Nerolac HD etc. It has high exposure to the industrial paints segment (~45% contribution), which has resulted in the company’s subdued performance. The company has taken significant initiatives to improve revenue from the decorative business. It recently launched HD paints under Nerolac and was the first player to launch eco‐friendly Zero VOC, low VOC, low odour range of decorative paints.

• Berger: Berger Paints (Berger) is the second largest paint company in India after Asian Paints in terms of market share. The company has a strong brand name with brands like Berger Easy Clean, Silk, Rangoli, WeatherCoat etc. The company has a strong distribution network of 16,500 dealers and has ~12,000 tinting machines. As far as international operations are concerned, Berger has presence in Russia where it has a production facility with a manufacturing unit in Krasnodar. The company entered Nepal in 2000 when it acquired Jenson & Nicholson. It has also acquired Bolix SA of Poland and also tied up with Becker of Sweden. In 2013, Berger acquired the

decorative business of Sherwin Williams India. Berger recently commissioned its Hindupur plant (total capacity of 300,000Kl) in Andhra Pradesh and will increase its capacity in a phased manner.

Porter’s Five Force Analysis1. Threat of New Entrants- (Medium) Paint market

in India is dominated by few players, making it difficult for anyone newly entering the industry to compete. Working capital needed is high-causes difficulty to local players & big firms enjoy economies of scale. Big players have high brand image & quality products & good promotional activities to attract customers.

2. Bargaining Power of Suppliers- (Medium) The Indian Paint industry is raw material intensive industry with more than 300 products going into the manufacturing of the final products. The raw material can be divided into different categories like pigments, additives, solvents, binders etc. Titanium Dioxide is one of the key pigment used in the production of paint and is facing a global supply shortage. Thus supplier of this material has good bargaining power.

3. Bargaining Power of Buyers- (Medium) Households and Industrial Users are the main customers of this industry. For housing requirements, the buyers are building contractors who buy in bulk and end people who paint their house. Customers are more price sensitive because for them number of options are available and decisions are made based on quality, price and differentiating factors like weather protection, environment friendly paints. Industrial segment is low margin high revenue business and buyers of these segments are knowledgeable about their needs. Therefore, price comparison is done effectively by the customers. However, the leading Industrial paint suppliers have their expertise in their favour, which limits the bargaining power of buyers.

4. Threat of Substitutes- (Low) The availability of substitute is very minimal. In the rural areas lime wash is conventionally used substitute for paints. One alternative option for decorative walls available today is Wallpaper. Buyer propensity to substitute is low. Relative price performance of Decorative walls is also high.

5. Intensity of Rivalry- (Low to Medium) About 80% of organized market is created to by the major players of Indian Paint Industry. But the current market growth rate can provide ample room of opportunity for all the players of the industry to flourish. However, competition will keep on increasing as market will get saturated, but this will take some time to happen, till then one can keep satisfy customer need with good margin. Also, presence of unorganized sector can cause competition.

0

2000

4000

6000

8000

10000

12000

14000

Net Sales(in Rs Cr)

Shalimar Paints

Akzo Nobel

Kansai nerolac

Berger Paints

Asian Paints

11648.83

3806.51 3549.06

2527

433.27

Net Sales Mar’15(in Rs Cr)

Others

Shalimar Paints

Jenson & Nicholson

ICI

Kansai nerolac

Berger Paints

Asian Paints

4%

6%

11%

16%

12%

37%

14%

% Market Share of Organized Sector

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Factors Affecting Paint Industry• Increasing level of income & education

• Increasing urbanization

• Increasing share of organised sector

• Development of the Realty, Automobile and Infrastructure sector

• Availability of financing options

• Increasing Penetration in the Rural Markets

Prospects• The market for paints in India is expected to grow

at 1.5 times to 2 times GDP in the next five years. With GDP growth expected to be between 5-6% levels, the top three players are likely to clock above industry growth rates in the future, considering they have a strong brand and good reach

• The market size of the paint industry in India is estimated at around Rs 40,000cr. Industry players expect close to 12% growth in business volume and 10-12% rise in sales in FY15

• Decorative paints segment is expected to witness higher growth going forward. The fiscal incentives given by the government to the housing sector have immensely benefited the housing sector. This will benefit key players in the long term

• Although the demand for industrial paints is lukewarm it is expected to increase going forward. This is on account of increasing investments in infrastructure. Domestic and global auto majors have long term plans for the Indian market, which augur well for automotive paint manufacturers like Kansai Nerolac and Asian-PPG. Increased industrial paint demand, especially powder coatings and high performance coatings will also propel topline growth of paint majors in the medium term

Latest Developments• The rural market grew 20 per cent in 2013-14. Rural

India’s incremental consumption expenditure is growing well

• Asian paints to invest Rs 2,300-crore on new plant in Karnataka

• Government likely to extend validity of environment clearance to Asian Paints’ project in Telangana

• Berger paints plans 2 new plans in Assam

• Berger Paints unveils new initiative ‘Express Painting’ for painting residential buildings

• Kensai Nerolac to set up new manufacturing plant at Gujarat

• Indian per capita consumption of paints is at 0.5 kg per annum if compared with 4 kgs in the South East Asian nations and 22 kgs in developed countries

• Organized sector in India controls 70% of the total market with the remaining 30% being in the hands of nearly 2000 small-scale units

• In India 30% accounts for the industrial paint segment in paint Industry while the decorative paint segment accounts for 70 % of paints sold in India

To conclude, the paint industry has a promising future in  India, provided players in the market implement innovation and cutting edge technology to combat the negative factors.

ReferenceCoatings World, Equity Master, IPA India, Indian Mirror, Money Control

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ASIAN PAINTSCOMPANY ANALYSIS

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Management

Asian Paints hiked its share in Berger International, to about 96.7 per cent and delists Berger International from the Singapore Stock Exchange.2014

2011Asian Paints partially restarts the operations at two plants of the company's subsidiary in Egypt which were shut due to prolonged curfew.

Asian Paints announced start of production at its new plant in Rohtak, Haryana.2010

The Consolidated Turn-Over of Asian Paints crosses Rs.3000 crore.2006

Four plants of Asian Paints are conferred by the British Safety Council with ‘Sword of Honour’.2005

Asian Paints receives the Forbes Best under a Billion Company award and becomes the only paint company to do so.2004

Asian Paints becomes the market leader in Indian paint industry.1967

The name of the company was changed to ‘Asian Paints’ from 'Asian Oil & Paint Company'.1965

Asian Paints introduce a new mascot – Gattu, the mischievous kid.1954

Asian Paints introduce small paint packs to cater to rural population and reaches a turnover of Rs.3,50,000.

1945

Suryakant C. Dani, Champaklal H. Choksey, Arvind R. Vakil and Chimanlal N. Choksi get into a partnership to form 'Asian Oil & Paint Company'.

1942

Shareholding Pattern

Foreign NRI

Other Companies

Financial Institution

General Public

Foreign Institutions

Promoters

7.22%

9.5%

13.11%

17.38%

1.38%

52.79%

% Shareholding Pattern as on 30.09.2015

Key Financials

The Net Profits of Asian Paints have increased in FY15 as compared to FY 14 by 13.54%. This rise has been aided by rise in Sales Turnover by 11.84% during the same period. The profits of the company have been on the rise continuously and at a similar rate for the past five years. This is because the company has invested heavily to build strong IT capabilities combined with organizational and process changes. This has enabled the company to cut down on its costs. The money thus saved was used by company to make some successful acquisitions in India as well as abroad. Another

Company OverviewAsian Paints is the largest paint company in India and second largest company in Asia. It has a turnover of Rs.141.83 billion. It has operations in 19 countries with 26 paint manufacturing facilities, which serve consumers in over 65 countries. The group has operations around the world through the following subsidiaries:

• Asian Paints in South Asia (India, Sri Lanka, Bangladesh and Nepal)

• SCIB Paints in Egypt

• Berger in Asia (Indonesia and Singapore), Middle East (Bahrain, UAE and Oman), Caribbean (Trinidad & Tobago, Barbados and Jamaica)

• Apco Coatings in South Pacific (Solomon Island, Vanuatu, Fiji and Tonga)

• Kadisco in Ethiopia

• Taubmans in South Pacific (Samoa and Fiji)

Asian Paints was setup in 1942 by four friends, as a partnership firm. The company has been the market leader in paints sector since 1967. It manufactures multiple variants of paints for decorative and industrial use. It has also introduced new and innovative concepts in the industry over time such as Colour Worlds, Home Solutions, Kids World, Colour Next and Royale Play. It has also setup Signature Store in Mumbai, Delhi and Kolkata for enhanced consumer experience. In the industrial sector, the company caters to the automotive coatings, floor coatings, road markings and light industrial coatings market.

Evolution Over the Years

Name Designation

Mr. Ashwin Choksi Non-Executive ChairmanMr. Ashwin Dani Non-Executive Vice

ChairmanMr. Abhay Vakil Additional DirectorMr. K B S Anand Managing Director &

CEOMr. Mahendra Choksi Non-Executive DirectorMr. Malav Dani Non-Executive DirectorMs. Amrita Vakil Non-Executive DirectorMr. Dipankar Basu Independent DirectorMr. Mahendra Shah Independent DirectorMr. DeepakSatwalekar Independent DirectorDr. S Sivaram Independent DirectorMr. S Ramadorai Independent Director

FY15 (in INR Cr)

FY14 (in INR Cr)

Growth

Sales Turnover 13041.96 11660.68 11.84%

Operating Profit 2010.52 1777.27 13.12%

Profit Before Tax 1947.10 1712.53 13.69%

Profit After Tax 1327.40 1169.06 13.54%

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reason for rise in profits was because Asian Paints was successful in capitalizing the increase in sales in the decorative segment because of the real estate boom.

The Earnings per Share have also increased over the past five years. The sudden drop in EPS from Mar’ 13 to Mar’ 14 is due to stock split in the ratio 1:10.

0

200

400

600

800

1000

1200

1400

Net Pro�t

Mar' 11Mar' 12Mar' 13Mar' 14Mar' 15

1327.4

1169.06

1050

958.39

775.15

Net Pro�t

0

2

4

6

8

10

12

14

16

18

20

Net Pro�t Margin (%)

Gross Pro�t Margin (%)

Operating Pro�t Margin (%)

Mar' 11Mar' 12Mar' 13Mar' 14Mar' 15

Pro�t Margin (%)

17.25 17.0517.24 16.81

17.57

15.3415.02

15.8315.61

16.14

11.39 11.2211.7 11.5 11.73

The Operating Profit Margin has increased from 16.81% to 17.57% as compared to the previous year. The Gross Profit Margin has also increased from 15.61% to 16.14% during the same period and so has the Net Profit Margin from 11.5% to 11.73%. All these ratios have been in the same range for the past five years.

0

10

20

30

40

50

60

ROCE

RONW

Mar' 11Mar' 12Mar' 13Mar' 14Mar' 15

31.37

46.31

32.46

47.75

34.74

50.38

38.3

52.24

38.9

55.73

Pro�tability %

Both Return on Net Worth and Return on Capital Employed have increased continuously over the past five years. This shows that the company has generated profits efficiently on the funds that the shareholders have invested.

0

20

40

60

80

100

120

EPS

Mar' 11Mar' 12Mar' 13Mar' 14Mar' 15

13.84 12.19

109.47

99.92

80.81

EPS

The liquidity ratios have decreased as compared to last year which shows that the value of current assets has become lesser as compared to the value of current liabilities.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Quick Ratio

Current Ratio

Mar' 11Mar' 12Mar' 13Mar' 14Mar' 15

1.09

0.49

1.18

0.64

1.18

0.61

1.07

0.57

0.93

0.34

Liquidity Ratios

Considering all the financial data, Asian Paints has been doing well continuously over the past five years and has shown healthy growth during this period.

SWOT Analysis

• The largest paint company in India and 2nd largest in Asia• More than 50% of market share in deco-rative paints and are strong competitors to Nerolac in Industrial paints & coatings.• Operations in 19 countries with 26 manufacturing facilities providing service to 65 countries across the world.• Strong international presence with its 4 subsidiaries; Berger International Limited, Apco Coatings, SCIB Paints and Taub-mans.• Strong distribution and logistic network across geographies using modern material storage and handling technologies• Dedicated research and technology facility with over 150 scientists

• Limited market share in industrial paints segment with Kansai Nerolac and Akzonobel giving stiff competition.• In decorative paints Industry Customer tastes and perceptions change very fast and products may become obsolete with change in trends, hence production plan-ning and inventory problem

• There is a good scope for growth espe-cially in industrial paints category• Needs to have more focus on Automo-bile industry in industrial paints seg-ment• Setting up paint manufacturing plant in Indonesia with 24,550 MT capacity subject to necessary regulatory and other approvals• Announcement of 100 Smart cities across India• Industrial output numbers at 3 years high.

• Volatility in Global markets marred by uncertainity on various fronts• Volatility in Raw material prices• Stringent Government rules and regula-tions regarding the quality of products and manufacturing facilities as Environ-ment policies are given more emphasis• Operations in Nepal impacted in the aftermath of the devastating earthquake• Weak monsoon which will reduce rural spending on paints

Strengths Weaknesses

Opportunities Threats

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Competitor Analysis • With high end technology available with shalimar in industrial coating segments, Shalimar paints pioneered aviation coatings, marine paints and painting of thermal power plants

Future Outlook• Volume growth was on back of a strong volume

growth in lower end paints categories. As a part of its strategy, the company has taken a price reduction in the lower end paints in March 2015 and increased its focus on this segment. We believe this could be to take on the players (unorganised and organised) which has a strong presence in this segment

• Despite reduction in price significant improvement in domestic demand may take time mainly because of 2 reasons first being recent forecasts of below normal monsoon might impact demand, especially from rural areas and second, on the industrial front, current improvement in demand conditions would need further support with increase in industrial activity and infrastructure push from government

• Weak global factors (uncertainty on Greece, US Fed rate hikes) and rising crude prices have increased volatility in exchange rates; Any further depreciation in Rupee would put pressure on profit margins

• No significant improvement expected in near term in international market such as Eqypt due to political turmoil and devastating earth quake in Nepal which has impacted business there that might take some time to recover

• The company plans to setting up additional capacity in AP and Karnataka market. For FY16, the capex is expected to be `7bn

• Given the huge scope for growth in Indonesia market, company is now expanding capacity and is planning to add 24500KL and is waiting for regulatory approvals

ConclusionAsian Paints is one of the undisputed market leaders in the decorative paint industry in India and is gradually emerging as one of the key players internationally. Against all odds and weak domestic demand company reported stellar volume growth and strong margin expansion. While, company believes demand sentiments are still subdued, it expects economic activity to further improve resulting in better volume trajectory. Likely uptick in urban demand will further drive volume uptick. The future presents challenges and opportunities for the company in equal measure, both domestic as well as overseas.

Berger Paints• Headquartered at Kolkata, with 11 strategically

located manufacturing units and about 170 sales offices( all including those belonging to the Company’s own division and subsidiaries). The company also has an international presence in 3 countries. With an employee strength of about 2,500 and a countrywide distribution network of 15,000+ dealers, Berger is acclaimed as a game changer in the sector with a vibrant portfolio of paints

Kansai Nerolac• Kansai Nerolac Paints Ltd., incorporated in the

year 1920, is a Large Cap company operating in the industrial, automotive and powder coating business. It develops and supplies paint systems used on the finishing lines of electrical components, cycle, material handling equipment, bus bodies, containers and furniture industries

• Kansai Nerolac is the second largest coating company in India and a market leader in Industrial Coatings

Akzo Nobel• Akzo Nobel N.V., trading as AkzoNobel, is a Dutch

multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 47,000 people

• Akzo Nobel India manufactures and markets a wide range of coatings and specialty chemicals. Around 1,780 people work in the six production facilities, two state-of-the-art research laboratories and 75 warehouses across India; its retailers are an impressive 8500 and growing

Shalimar paints• Established in 1902, ‘Shalimar paints’ is the India’s

first paint company and is a pioneer in the field of paints and coatings

• The company is engaged in manufacturing and marketing of all kinds of decorative paints and industrial coatings. Some of India’s most iconic structures and buildings namely Howrah Bridge, Rashtrapati Bhawan, Salt Lake Stadium, All India Institute of Medical Sciences, and many others, continue to use Shalimar Paints

ReferencesAsian Paints-Company Info, Asian Paints-Investors, Economic Times-Stocks, Money Control-Stocks

Name of the company

Market Cap

(Rs Cr)

Sales Turnover(Rs Cr)

Total Assets(Rs Cr)

Net Profit

(Rs Cr)

Asian Paints 83,896.23 11,648.83 3,995.79 1,327.40Berger Paints 15,544.31 3,806.51 1,570.77 266.03

Kansai Nerolac 13,613.11 3,549.06 1,618.25 271.68Akzo Nobel 6,464.79 2,527.00 905.90 186.30

Shalimar Paints 230.72 433.27 160.90 -10.58

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MTVBRAND ANALYSIS

CADBURYBRAND ANALYSIS

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MTVBRAND ANALYSIS

Cadbury is a brand which almost everyone knows. Even after completion of more than 100 years, the brand leaves a significant mark amidst all the competition and still stands tall in food product sector. Cadbury is world’s leader in chocolates and it is also one of the topmost FMCG brands in India. On 21st April 2014, Cadbury India changed its name to Mondelez India Foods Private Limited.

Cadbury’s Origin & Growth Over the Years In 1824, John Cadbury opened a grocer’s shop at 93 Bull Street, Birmingham. He sold cocoa and drinking chocolate, which he prepared himself using a pestle & mortar.

In 1879, Birmingham Architect George H. Gadd worked closely with George Cadbury to draw plans for new Bournville factory.

In 1897, When Cadbury started making Cocoa Essence; they had lots of cocoa left, so they used it to make bars of the chocolate.

In 1847, Cadbury brothers’ business shifted to new and larger factory in Bridge Street in Birmingham.

In 1861, John’s health rapidly declined and he finally retired in 1861 handing over complete control of the business to his sons Richard and George.

In 1866, Cadbury business introduced new processing technique, which resulted in launching of ‘Cadbury Cocoa Essence’.

In 1905, Cadbury came up with their first logo. Logo was designed by Georges Auriol.

In 1920, Cadbury Dairy Milk was launched in brand new purple colored violet wrap. The full Dairy Milk range became purple and gold in 1920.

Cadbury decided to enter Indian market in 1948. Cadbury India began its operations in India by importing chocolates. On 19th July 1948 Cadbury was incorporated in India. Cadbury has a share of over 70% in the market, which is the highest Cadbury brand share globally. Cadbury now has 5 manufacturing units all over India. They are located as follows.

Thane (Maharashtra), Induri (Maharashtra), Malanpur (Madhya Pradesh), Banglore (Karnataka) and Baddi (Himachal Pradesh).

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Mergers & AcquisitionsCadbury merged with drinks company Schweppes to form Cadbury Schweppes in 1969. In 1978 the company acquired  Peter Paul, the third largest chocolate manufacturer in the United States for US $58 million, which gave it a 10 percent share of the world's largest confectionery market.In 1986, Cadbury Schweppes sold its Beverages and Foods division to Premier Brands for £97 million.In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two separate entities: one focusing on its main chocolate and confectionery market and the other on its US drinks business.On 19 January 2010, it was announced that Cadbury and Kraft Foods had reached a deal and that Kraft would purchase Cadbury for £8.40 per share, valuing Cadbury at £11.5bn (US$18.9bn). Kraft, which issued a statement stating that the deal will create a "global confectionery leader", had to borrow £7  billion (US$11.5bn) in order to finance the takeover.Kraft had needed to reach 75% of the shares in order to be able to delist Cadbury from the stock market and fully integrate it as part of Kraft. This was achieved on 5 February 2010, and the company announced that Cadbury shares would be de-listed on 8 March 2010.Product Offerings by Cadbury IndiaChocolates Cadbury Dairy Milk:The journey of this chocolate started in year 1948. Other than Cadbury Dairy Milk, there are other variants in the brand as Fruit & Nut, Crackle, Roast Almond, Wowie, 2 in 1, Silk.5 StarThis chocolate was launched in 1969. It is the second largest chocolate brand after Cadbury Dairy Milk with a market share of 14%. Variants of this chocolate are Cadbury 5 Star Crunchy and Cadbury 5 Star Fruit & Nut.PerkCadbury Perk was launched in 1996. The brands later launched were Perk XL and Perk XXL.Celebrations: This brand was launched by Cadbury in order to replace small gifts etc. given on occasions like Diwali, Rakhi etc.EclairsThis is one of the most popular brands in Eclairs category. The brand which was later introduced in this category was Cadbury Eclairs Rich Brownie.GemsThis brand was launched in 1968. This brand is very popular among kids.Beverages Cadbury Bournvita:This brand was also launched in India in 1948. It is one of the oldest brands in category of Malt Based Food.

Biscuits Oreo:This brand is very old. It was launched in the year 1911 in the world but, this brand was launched in India in 2011.Gum Bubbaloo:This gum with a bubbly taste was launched in India in the year 2007.Cadbury’s Marketing Campaigns

1. The Real Taste of Life

As the concept of chocolates was from the western part of the world it was not easily acceptable to Indians. Indians thought chocolates were made only for kids. So, there was stagnancy in the sale of chocolates. So, Cadbury came with this campaign and ads were created in which a girl starts dancing in a cricket match on Indian win. Here focus of the ad was on two things: the joy and happiness of Indian win and a Young girl dancing to openly to express herself. This campaign helped Cadbury to attract more youths towards them.

2. Pappu Pass Ho gaya

This was another popular campaign for Diary Milk, launched in 2005. This ad basically tried to convince people to celebrate joys in their life with Cadbury Dairy Milk. This ad totally justified the tag line of Cadbury i.e. “Kuch Meetha Ho Jaye”.

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Cadbury’s Marketing Campaigns in Other Countries than India

1. “Taste- Search for Joyville Tatser”

In the year 2013, Cadbury was facing a problem with the sales of Cadbury Dairy Milk chocolate in UK. The brand has not carried out a major dairy milk campaign for years. This campaign was run by Golin Harris. Cadbury wanted to use Joyville concept. Joyville concept is nothing but an imaginary place where Cadbury’s chocolate is made which had previously featured in brand’s advertising.

As the name of the campaign suggests, you can have an idea which has something to with the taste of the product. Cadbury did a research with more than 900 people. They were asked to describe the taste of Dairy Milk in one word. They had broadcast this campaign on SunOnline and other national media. They declared that the winner will be crowned as ‘Joyviille Taster’. In their tour of 5 weeks, they visited train stations, shopping centres, cinemas, supermarkets and service stations.

Cadbury launched this campaign at British Library UK. It was presented by Caludia Winkleman and Brian Blessed. They had a great chocolate mixionary machine which was capable of turning the words in to the chocolates. Guests were given a chance to describe the taste of the chocolate in one word. The voice would be then spoken by Brian blessed in that room in his booming voice before Mixionary machine which would then turn into chocolate.   This campaign helped Cadbury as after the campaign 20% sales of the chocolate were increased.

2. Gorilla

Gorilla was a British advertising campaign launched by Cadbury in 2007. This campaign was conducted in order to promote Cadbury Dairy Milk in United Kingdom. The budget for this campaign was around 6.2 million pounds. Different mediums were involved in order to launch this campaign. There was an advertisement of 90 seconds. An advertisement was also in cinema spots. The campaign also had appearances on billboards, print newspapers and magazines.   The campaign itself was handled by advertising agency FALLON LONDON.The advertisement was first appeared on British television on 31st August 2007. It also appeared in a number of other countries like Canada,

3. Kuch Meetha Ho Jaye

This campaign was mainly designed to increase the number of occasions on which people could eat a Dairy Milk. This campaign was an effort to try and replace traditional Indian sweets by Cadbury Dairy Milk. Cadbury mainly targeted those occasions on which more exchange of sweets take place.

4. Ramesh – Suresh campaign for 5 Star

This campaign was very popular and it really helped Cadbury as there was considerable increase in sales of 5 Star chocolate. As soon as you eat this chocolate you go all together in a different world just because of the taste of the chocolate. By giving this message from advertisement Cadbury totally justified the properties of 5 Star.

5. Dairy Milk Silk campaign

Cadbury India has launched a TV campaign for the new edition of the Cadbury Dairy Milk Silk. The ad film created by Ogilvy & Mather. The ad featured three young people who were shown savoring the new 'silkier' chocolate. They were shown indulging in the chocolate, licking it and scooping it with their fingers, underlining the softer, smoother and silkier promise. The voice over says, “Have you felt the new Silk? Some say it’s softer.  Some say its smoother. You could say it’s silkier”. This campaign was successful in sending their message to people and that message was that by eating this chocolate you would get different chocolate experience.

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Australia, South Africa and New Zealand. This advertisement was also appreciated in these countries. Then it was uploaded on YouTube and it received 5,00,000 views in its first week. So, public penetration of the brand was considerably increased soon after the launch of this campaign.

STPSegmentationGeographic: It divides the market into different geographic units – neighbourhoods, cities, regions, countries. So Cadbury would heed to different needs and lifestyles of people in different areas.

Demographic: It divides the market into groups based on demographic variables including age, gender, family size and life cycle.

Psychographic: It divides the market into groups based on social class, lifestyle and personality characteristics. Cadbury has wide range of products catering to different lifestyles and social classes.

Behavioural: It divides the market into groups based on their knowledge, attitudes, uses and responses to the product. The following are commonly applied behavioural segments – occasions, benefits sought, user rate, user status, loyalty status.

Targeting

Cadbury has been successful in targeting the younger generation. It has 70% of market share in the confectionary section. Though most of the products are for the younger generation, it is also targeting the older generation with its campaigns like #TheLastPiecefeaturing veteran Bollywood actor Waheeda Rehman where at the dinner table the last piece goes to her.

Its chocolates come in various price range taking care of different social classes. Starting from Rs1 (Eclairs), Rs5 (Cadbury Dairy Milk) to Rs150 (Dairy Milk Silk) and family size 1kg bars. For those who like bitter dark chocolates Cadbury came up with its premium quality Bournville Dark Chocolates.

Cadbury with its drink mixes (bournvita) is targeting parents who are concerned about their children’s proper development with its campaign #TaiyariJeetKi.

Positioning

Cadbury has been trying to delve into the Indian culture through various campaigns. It has been trying to replace traditional sweets with its range of chocolates.Its Campaigns during festivals like Rakshabandhan, Diwali, etc. have been quite successful. During Diwali Cadbury came up with its ‘Gift a Diwali Campaign’ to promote Cadbury Celebrations chocolate.

Chocolate in India is still an impulse purchase and is not a part of our everyday culture.   Cadbury’s attempt to convince housewives to stock chocolates at home will help gain more mainstream acceptance of chocolate, especially among adults. This was done with its campaign – Meethe mai kuch meetha ho jaye and The Last piece at the dinner table.

India’s have a tradition of having something sweet before starting any important task. Cadbury has been trying to embark on this opportunity with its series of campaigns – Shubh Aarambh.

It has positioned its milk mixes as healthy alternatives to plain milk. With its range of flavours it made it attractive for children.

Cadbury’s Biscuit Oreo has been positioned as the world’s favourite biscuit.

Market Share of Cadbury’s Products in different seg-mentsIt is the market leader in the chocolate confectionery business in India and World Wide with a market share of over 55.5% in India.

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Value Share in %

Mars International

India

AmulFerrero India

Nestle India

Mondelez India Foods

55.5

17

51.1 1.1

India’s Top Chocolate Confectioneries in 2014 (Value Share in %)

References:Campaign India, Economic Times, Cadbury ADs

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THE HALO EFFECT IN MARKETINGCONCEPT OF THE MONTH

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Introduction‘Halo effect  is a  cognitive bias  in which an observer's overall impression of a person, company, brand, or product influences the observer's feelings and thoughts about that entity's character or properties.’ Psychologist Edward Thorndike named it in reference to a person being perceived as having a  halo. Succeeding researchers have studied this in relation to  attractiveness  and its bearing on the educational and judicial systems. The halo effect is a certain type of  confirmation bias, wherein positive feelings in one area cause neutral or ambiguous traits to be viewed in positive direction. Edward Thorndike originally coined the term referring particularly to people; however, subsequently its use has been expanded widely in the area of brand marketing.The halo effect can work in both positive as well as negative directions (the horns effect). If the persons/users like one aspect of something, they will have a positive inclination toward everything about it whereas if they dislike one aspect of something, they will have a negative inclination toward everything about it.Halo Effect in Marketing

The positive perception about Apple's iPod on its users then generated positive effect on other Apple products. After the successful introduction of iPod in market, Apple noticed very high demand and drastic increase in sales for rest of their products.

This phenomenon is again common in the automobile industry. An automotive company may introduce a halo vehicle in market in order to create positive perception of their products in market with the hope of increasing sales of their other vehicle models as well. These halo cars are generally sports cars that are mostly related to superior technology, eye-pleasing designs and superior performance.

Halo Effect in AdvertisingA "halo effect" occurs when a product or a company finds marketing success due to its association with a successful product, company or any other recognizable element. If the halo effect is used effectively, it can help a company to save money on marketing by using momentum created previously by the company, to reach a target audience.

Catalog SalesCompanies are often benefited from the halo effect of catalog sales when they release a product in the market that becomes popular with consumers. With its popularity not only do past products start to sell more, but the halo effect created also extends to future product releases. Whenever particular product from a family of products sells well, the other products from the catalog also get benefited. This can be most commonly observed in the sales of music CDs. When an artist has a hit song or album,along with the current hit, the rest of his catalog starts to sell.

Marketing is the number one field in which halo effect is successfully and widely used. It has a close relationship with marketing. It simply explains the biasness of the customers towards certain services or products based on some pleasant or favourable experience with some other services or products offered by the same manufacturer.

Example: Apple introduced the iPod some years ago which was very creative in its design, functions and performance. Apple iPod introduced a gateway to novel thinking in its customers and extremely eye-pleasing experience for iPod users.

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Corporate Brand NameSome corporate names become their most powerful marketing tools in their own right, which leads to a halo effect of marketing other products. For example, Nike has developed strong reputation for making tennis shoes and basketball sneakers. Nike used this successful image it had developed in sports shoes to expand out its business into sporting equipment such as golf clubs and golf balls. If the corporate brand name is strong in the market, then any product released by that company becomes instantly recognizable to consumers.

Celebrity EndorsementsCelebrities are widely used to endorse products in advertising. The connection of celebrity to product does not always have to be obvious to be effective. For example, a shaving cream endorsed by a sports figure does not offer an immediate correlation between the sport person’s profession and the product. Still the halo effect stems from the marketing value generated by associating the product with the fame of that celebrity.

Industry-Wide Halo EffectWhen a product idea takes off in a given industry, the halo effect created can be beneficial to all the manufacturers within the industry. For example, when hybrid vehicles were launched and marketed as offering significantly better fuel efficiency compared to standard vehicles, several automobile companies used this ensuing popularity of hybrid vehicles as a way to improve sales of their own newly introduced hybrid car models.

ConclusionThe halo effect is one of the best tools for marketing. Many companies and marketing strategists use the halo effect in order to get the best results when it comes to promoting their services and products.

The pleasant experience the customer had with previous services and products may be useful for selling more services and products to them. In such cases, people do not assess the pros and cons of the services and products they want to buy. Instead they allow their perceptions to influence their buying decision.

References:The Halo effect, Definition, Halo effect in Marketing, Human Psychology & Halo effect

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CONVERGENCEEVENT REPORT

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On 4th October 2015, SIMCON- SIMSREE Consulting Club organized ‘CONVERGENCE-15’ which was national level case study competition, in association with ‘My MBA Lab’, held at SIMSREE. The competition consisted of 3 rounds.

Promotion of the Event Convergence was promoted on several social sites like Facebook, Blogs, and LinkedIn. Also the updates of competition were posted on dare2compete.com; a very popular online portal for B-School students to be updated about competitions and other events.

The search for the best minds, who could think like a consultant, spanned across three challenging rounds. We received around 160 entries from across B-schools like IIMs, XLRI, SPJIMR, NMIMS, NITIE, JBIMS, TISS and many more. The first round was an online quiz of 30 questions for 30 minutes and 8 teams were shortlisted for the next round. In round 2, a case study was given to the teams. Based on the presentations we received from these teams, we got them evaluated and came up with the top 5 teams for the final round.

Round-1: It was elimination round. There was an online quiz of 30 questions, to be solved in 30 minutes. Around 160 teams participated of which 8 teams are shortlisted for 2nd round.

Round-2: In this round, case study provided by ‘My MBA Lab’ was given to all the teams. They were supposed to make a presentation on the case and submit it in 5 days. These cases were evaluated on various aspects and 5 teams were selected for the final round.

Round-3: It was On-campus round in which selected teams had to present their case study solutions in front of esteemed panel of judges, which would have been judged on various parameters.

Judges for the Final Round1. Mr. Praful Satasia:

Mr. Satasia is currently Vice President - Advisory Group at Ernst & Young LLP. He is managing West Region - SAP Implementation services across manufacturing sector. He has worked with companies like SAP India as Solution Manager, IBM India as GM- Sales - Global Business Services.

2. Mr. Mahesh Manghnani:

Mr. Manghnani is currently Vice President - Technology at Accenture. He has more than 19 years of rich global experience and also has successfully undertaken several IT leadership and senior management roles in the areas of Delivery, Sales & Pre-sales. In the past he has worked with companies like Capgemini and TCS.

3. Ms. Gauri Gokhale:

Ms. Gokhale is currently the Vice President and Head-STRAD at Atos. She has 28+ years of IT experience covering Indian Pure-plays as well as MNCs. She has worked with companies like Capgemini Consulting India Pvt. Ltd., Mahindra British Telecom and Syntel.

4. Ms. Sunita Bhagatjee:

Ms. Sunita is Channel partner at Prisma Global Ltd. She is Alumnus of 1991 batch. She has 23 years of rich work experience in various companies like The Bombay store, Sanghavi Exports, Temptation food ltd, D’damas jewelry & BPL Ltd.

5. Mr. Parimal Shah:

Mr. Shah is VP & Regional Market Head, West- Axis Bank ltd. He is alumnus of 1994 batch. He has also worked with other companies like HDFC bank, Motilal oswal securities, CITI Bank & HDFC Securities.

Top 5 Teams1. SimChamps (SIMSREE) - Winners

2. AceConsult (SIMSREE) - Runner Up

3. Creative NMinds (NMIMS)

4. The Wolves Of Powai Valley (SJMSOM, IIT-Bombay)

5. Exemplars (SJMSOM, IIT-Bombay)

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The case was about plan of developing and launching of a smartphone app by one of the prominent player in fitness/gym industry. The main motto of the app is to use their network and expertise to connect various stake holders of fitness industry and fill the gaps in fitness industry.

Following aspects were covered by almost all the teams in case solution

1. Brand Positioning & Communication for launch:

-Name for app, Tagline

-Launch communication and strategy

2. Consumer and market analysis:

-Consumer segmentation

-Addressable market size

-Value chain analysis etc.

3. Market Strategy:

-Enablers, challenges, &opportunities to scale, Differentiating factor (usp), secure funding options

-Value proposition, monetization and pricing

-Marketing & Promotion plan

But the winning team had some higher edge over the other teams.