Strategic Analysis Portfolio: Cadbury and Peppersmith Confectionery

This report conducts a strategic analysis of Cadbury and Peppersmith, two companies in the confectionery industry. It begins by introducing the companies and their missions, visions, and objectives. The report then identifies the key issues faced by each company, including Cadbury's past Salmonella contamination issue and Peppersmith's challenge of entering a competitive market. The analysis utilizes the BCG matrix to assess the market share and growth potential of both companies, placing Cadbury in the cash cow segment and Peppersmith in the dog segment. The report further examines the strategies employed by both companies, including the build and hold strategies using the Ansoff Matrix. Cadbury adopted a hold strategy focusing on quality control and marketing to regain consumer trust, while Peppersmith implemented a build strategy emphasizing innovation and product differentiation. The report also analyzes the impact of these strategies, highlighting the positive outcomes for both companies in terms of improved market share and brand image. Finally, the report discusses the companies' positions in the Blue Ocean/Red Ocean framework, positioning Peppersmith in the Blue Ocean due to its niche market focus and Cadbury in the Red Ocean due to its competitive market.

Strategic analysis

Table of Contents
INTRODUCTION....................................................................................................3
STRATEGIC ANALYSIS PORTFOLIO........................................................................3
About the companies ......................................................................................3
Mission, Vision and Objective...........................................................................3
Issue faced by the companies.........................................................................4
BCG Matrix analysis.........................................................................................5
Strategies used by the companies...................................................................6
Impact of the strategy.....................................................................................7
Blue Ocean/Red Ocean....................................................................................8
Pursuit off competitive advantage...................................................................8
Conclusion...........................................................................................................9
REFERENCES......................................................................................................10

INTRODUCTION
Strategic analysis portfolio is a tool used by companies to identify the strategic
choices made by them. The company's portfolio analysis is done to evaluate
challenges faced by it and solutions adopted to resolve them. Strategic analysis also
assists companies to identify the current strategic options for various product created
by them (Büyüközkan and Çifçi, 2012). This is done to achieve competitive advantage
in the market over competitors. The research discusses strategic options opted by
Cadbury and Peppersmith. Both the above confectioneries have faced various
challenges and in order to achieve company’s long term objectives, they formed
strategic options. These strategies and options are discussed in the research.
STRATEGIC ANALYSIS PORTFOLIO
About the companies
Cadbury was founded in 1824 in Birmingham, United Kingdom by John Cadbury.
The company is among the widely known confectionery brand of the world (Capar and
et.al., 2013). It is the second most liked brand after Wrigley's. It has many products
like Dairy Milk Silk, Brunch bar, Bubbly, Marvellous Creations, Big Race Oreo, pebbles
and many more. Moreover, bars like Fudge, Curly Wurly, Wispa, Caramel etc. are also
manufactured under Cadbury. It operates in more than 60 countries with more than
50,000 employees. On the other hand, Peppersmith was founded in 2009 by Mike
Stevens and Dan Shrimpton (How xylitol works, what it is and why it’s good for you, 2016).
Although, it is new in the confectionery industry, it is accredited by British Dental
Health Foundation. They produce sugar free xylitol chewing gums and mints made
with any preservatives or artificial flavours.
Mission, Vision and Objective
Cadbury Peppersmith Mission- with the statement
“cadbury means quality”, they
strive to achieve quality and
continuous improvement in their
 Mission- To be challenging
enough for the competitors
through innovation, passion and
thinking.

product (products, 2016). Vision- To work together to
create a brand that is loved by
all.
 Vision- To create high return on
investment through hard work
and customer satisfaction. Objectives- To increase
performance, respect,
responsibility and achieve
integrity.
 Objectives- Their objective is to
create something new and to
differ from the status quo.
Issue faced by the companies
Cadbury has faced many challenges in the past. The major issue was faced in
2006 when the company detected that it had Salmonella bacteria strain in its
chocolate. It challenged in European legislation and the company pleaded guilty for
the same (Tsakona and et.al., 2013). On the other hand, Peppersmith entered in the
confectionery market with a new and innovative product. The main concern for the
company was to establish itself in the fiercely completive market of the United
Kingdom. As Cadbury lost its reputation in the market and its goodwill for being the
most quality concern company, therefore it decided to formulate a new strategy to re-
establish itself in the market. Peppersmith in the contrary decided to bring innovation
in itself through no-plastic chewing gums and mints with xylitol in them. This was done
to achieve competitiveness among competitors.
Image 1: BCG Matrix Diagram
(Source: The BCG Growth-Share Matrix, 2016)
BCG or growth-share matrix was created by Bruce, D Henderson in 1970. This matrix

helps the organisation in analysing their business units or product lines. The matrix
locates their growth and market share based on the study of their branding, marketing
and strategies (Aslani, Naaranoja and Wong, 2013). In order to analyse Cadbury and
Pepper smith market share, BCG matrix is used. In this business portfolio tool, market
share is related with industry growth. It can be said that this tool allows the analyst to
identify captured market potentials and growth prospect of the company. The strategy
adopted by the firm is used to analyse their positioning in the matrix. In order to be
successful, a company tries to create diversified portfolio of its products (Theißen and
Spinler, 2014). This is done to achieve growth and large market share. On the other
hand, business also needs to achieve competitive advantage over the competitors.
BCG matrix is divided into four segments i.e. dogs, question marks, stars and
cash cows. Dogs are those companies which have low market share and low growth
rate. They do not generate much cash as they do not receive reasonable sales target
(Dutta and Jackson, 2013). They have to work hard in order to establish themselves
and achieve better return on their investment. Question marks are fast pacing
companies. They do make good money but lack in generating cash. This is because
they have low market share and eventually, can turn into a cash cow by achieving
good market space. Stars on the contrary create huge amount of cash as they have
reasonable market share. A company with diversified product profile must achieve
position of star. This is expected so that company can maintain its growth rate and
earn better revenues in the market. Cash cows are the leaders of market (Harmatz and
et.al., 2014). They are those big multinational brands who have achieved greater
return on their assets and gain huge profits. They are able to dominate the market
with their large diversified cash generation.
Cadbury already has high market share and growth rate. This company is
located in the cash cow segment of BCG matrix (Walker and et.al., 2014). The position
of Cadbury in terms of market capture and product differentiation is high and it earns
huge profits through increased sales. It is evident that company is a huge brand name
in the confectionery industry. It is serving in the international markets as well.
Peppersmith, on the other hand is struggling to achieve a brand position. It is a new
name among existing companies. Hence, it has low market share and is striking to
achieve sales targets. It lies in the dog segment of BCG matrix.
Strategies used by the companies
In order to eliminate all then issues and challenges faced by the company.
Cadbury and Peppersmith used build and hold strategy. They are explained below with
support from Ansoff Matrix.

Image 2: Ansoff Matrix
(Source: Ansoff Matrix, 2013)
1. Build strategy used by Peppersmith- This confectionery producer decided
to build its organisation. That is it wanted to grasp market share and achieve
more customer attractions. In order to that Peppersmith decided to generate
more innovations in its product (Sönmez and et.al., 2013). Building brand image
was not easy as it had huge competitors who were already established in the
United kingdom. But Peppersmith brought a different product that brought the
company differentiation advantage. It decided to achieve more market space
by concentrating in increasing sales of the products. Although company had
only two products i.e. chewing gums and mints. It offered interesting packaging
to the customers. Each packet of the chewing gum would consist of paper that
would help the user in disposing off the chewed gum. Peppersmith have huge
potential to outgrow itself with innovation among the confectionery market. In a
short span of time company has build a brand image among customers for
providing healthy substitute of gums and mints. The main building strategy was
deployed in the products departments. The main objective of the management
at Peppersmith was to outgrow itself (Balasubramanian, Bhattacharya and
Krishnan, 2015). It wanted to increase sales and marketing to cater its

investment. In order to grow company also invested more funds in the
organisation. Now Peppersmith wants to establish itself in new markets by
adapting the same strategic options.
 Hold strategy used by Cadbury- As company already have huge sources of
finance and expertise being the industry leader. The company employed holding
strategy to increase the business potential. It is evident that companies image
depleted and was disrupted due to high criticism (Merat and Bo, 2013). It was
not expected from Cadbury to perform such a scar for itself. It was completely
Cadbury was in fault to not analyse the threat which the infection possessed on
the health grounds of the consumers. A lot of negative media distorted the
goodwill that company was creating since its establishment. It was now very
vital for the company to adapt hold and preserve its business prospects. A
complete restoration is required in order to achieve the lost trust among the
customers. Company kept on doing what it was doing but it now got more
attentive about the quality norms. More importance was levied in securing the
manufacturing sites from any sort of infection. Packaging was improved i.e.
layer of packaging was added to protect the product (Dyck, Gordon and
Kung,2014). To improve the negative media image huge marketing and publicity
was done. The manufacturing plants were shown in many videos featuring
cleanliness and hygiene. It was a correct decision for Cadbury to continue what
it was doing to fetch more cash flow for itself.
Impact of the strategy
The impact of hold and build strategy used by Cadbury and Peppersmith were
positive. Companies were able to understand the weakness and tried to improve their
competencies. Cadbury understood that it required holding itself from creating new
products (Merat and Bo, 2013). It laid emphasis on increasing sale of its existing
products. The breach of companies mission already had hampered the sales and
revenue generation ability. By development of marketing and branding strategies
under holding assisted the company in achieving the lost customer satisfaction. The
management at Cadbury now laid attention on improving the quality standard of
manufacturing plants. As it is a confectionery producer it was important to keep
quality products up-to the mark. The new marketing policy helped the company in
communicating firm's message among the masses. Now Cadbury is perceived to be
more quality concerned and the trust among customers has been regained. On the
other hand, Peppersmith paid more attention in targeting new market segments.
Expansion would benefit the company in covering new markets. More customers could
be lured by laying emphasis on enlarging product portfolio. As Peppersmith was

producing only two products it couldn't reach to international market. It also required
huge investment in order to enter into markets other than United kingdom (Aslani,
2014). Company also improved marketing aspect as it now is actively advertising its
products. It is relevant for a company to create a positive location in customer mind. It
is only then possible to be a successful brand.
Both the companies were able to improve the market share in The United
kingdom. One being an established firm and the former being a new venture. It was
difficult for the holdings to create a new brand image among consumers. Cadbury
tried to reduce the affect of the same on other products (Lahrichi and et.al., 2013). It
tried to sideline this by accepting its mistakes in front of consumers and legislation.
Peppersmith on the other hand has become a niche brand which serves to low but
powerful customer group.
Blue Ocean/Red Ocean
As per the above research it is evident that Peppersmith lies in Blue ocean and
Cadbury on the other contrary is stuck in Red ocean. Blue ocean is a strategy
formulated by W. Chan Kim and Renée Mauborgne in 2005. According to the author's a
company can strike to achieve greater business potentials by extending beyond
competition (Daaboul and et.al., 2014). It is not ideal for a new venture to compete
with those companies who are already established. Instead, they must locate
themselves with a different brand image. They need to create product differentiation
which would help them to achieve better customer base. Hence, by adhering to same,
Peppersmith tried to oppose competition by creating niche market among customers.
The target market of this manufacturer were those users who were inclined more
towards their health perspective. Peppersmith used only natural based ingredient who
reduced the harmful affect of artificial content added by other chewing gum producer.
Blue ocean aims more at creating differentiation and creative whereas red ocean is
inclined towards cost cutting and being a conservative player. Cadbury is an
established firm and is working as a confectionery manufacturer for more than 10
decades. It wants to target itself more among customers through cost cutting
measures. Red ocean generally believes in outsmarting competition by achieving
higher profits over competitors. There is specific rate of competition, defined market
and fix customers. Cadbury has low scope for creating innovative or different products.
Apart from this it can predict sales and its logistics as it has been dominating
confectionery market around the glove (Walker and et.al., 2014). Red ocean are
crowded as almost every company today lies under this field as there is low scope to
create a new product. They have to compete in their existing market space and they
tried to exploit demand among existing customers. Cadbury is only entitled in

improving its current position and does not think much about bringing uncontested
product to the market. They don't break value cost and are entitled to achieve low cost
advantage to get more profit from a reasonable selling price.
Pursuit off competitive advantage
The strategy appointed by both the companies I n their present structure have
provided aids to themselves. That it is it can be said that they could pursuit
competitive advantage over competitors by creating changes in their products,
branding and marketing strategy. Cadbury improved its product by laying emphasis on
a quality product. The main challenges of infestation was eliminated by prioritising on
heath standards (Büyüközkan and Çifçi, 2012). The decision to re-establish itself
among the market have greatly affected the company. Consumers now perceive
Cadbury as a more quality concerned company. Although company did not make any
changes in the products it was still able to achieve high sales and revenue targets. It
was due to that the fact that Cadbury tried to stick with the strategic options instead
of deviating from its path. Markets perspective about Cadbury also changed as they
consumers expectation levels increased. They were more aware about the products
provided to them instead of blindly following the brand. It was found that Cadbury's
entire brand image reshaped. On the contrary Peppersmith was also facilitated by the
strategy. It now paid attention to expand itself among new markets. Until now it was
focusing mainly two products. It realised that it requires sticking to its creative styles
and generate more innovation in the product. It could be analysed that Peppersmith
was able to achieve its objective and long term objectives by appointing these
start6gic options into its business mechanism (Tsakona and et.al., 2013). Both the
companies were able to achieve their targets and objectives to a greater extent by
adopting the above described strategic option.
CONCLUSION
It can be analysed from the research that Cadbury and Peppersmith were both
facing issues that were affecting their business prospects. It can be said that strategic
analysis plays vital role in providing competitive advantage to the companies. Cadbury
was required to pay attention on the quality of its product. It had to face great deficit
and loss due to the above issue. On the other hand Peppersmith is a new company in
the confectionery industry. The main objective of the firm was to be able to establish
itself and achieve viable return on investments. Thus, it can be said that by adopting
the above discussed strategies both the company were able to find better strategic
option for themselves. This helped them in achieving competitive advantage over
competitors.

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