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HomeMarketingThe Marketing MixLaunching a new product into a developed market

Launching a new product into a developed market

Launching a new product into a developed market

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 70of sales value in the UK market, with sales of sweets (sugar confectionery) at around 30 per cent.

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 a competitive advantage. Over recent years, competitors in the chocolate market have made significant investments in new product development. Indeed, over 15 per cent of volume sales in the last ten years have been generated by new products. For Cadbury, this figure is even higher, at 20 per cent 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.

Launching a new product into a developed market

The snack market

It is not difficult to find out about ‘snacking’. Walk into any newsagent, supermarket and petrol station and you are confronted by many different types of confectionery, as well as different varieties of crisps, cakes, nuts, pies and doughnuts. This is the snacking business.

‘Held in the hand’. categories include:

  • Confectionery £4.9bn (chocolate sector £3.4bn)
  • Biscuits £1.7bn
  • Snacks £1.2bn
  • Crisps £1.1bn
  • Ice Cream £0.8bn.

Snacking is said to reflect the fast pace and busy lifestyle of many people in the 1990s. It is fast, convenient, easy and mess-free. The key snack consumers, 16-34 year olds, represent 37 per cent of all snack buyers.

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:

  • to grow the market for chocolate confectionery
  • 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 a 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 per cent 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.

Launching a new product into a developed market

Pack design and brand name

A key element of any new product launch is the development of a strong pack design and brand name. The design brief for Fuse had two clear requirements:

  • To communicate the dynamic and slightly wacky ‘personality’ of the new product and create interest at point-of-purchase (i.e. in store).
  • To bring the brand name to life by communicating the fusion of Cadbury’s chocolate with the snacking ingredients.

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 gunpowder 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 on 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 purchases. The ‘treat size’ and the multi-packs were aimed at families.

Brand name

Like the 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 per cent of consumers rated Fuse as excellent or very good and 83 per cent 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 in 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 ‘look’ 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, Marketing (trade publications) and The Daily Telegraph, which reviewed the product on 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 per cent with 19 per cent 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 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 per cent and capturing an astonishing 6.5 per cent of hand-held confectionery product sales.

It also contributed significantly to Cadbury’s growth in 1996. The launch 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.


This case study has examined Cadbury’s ability to use innovation in a developed and crowded marketplace. There were three clear elements in this process:

  • the use of consumer research to identify a significant market opportunity
  • product research and development combined with extensive consumer testing
  • massive trade and consumer hype generated by a national launch.

Snacking remains a 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.

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