04. Sweet Chocolate and Bitter Business
04. Sweet Chocolate and Bitter Business
Cadbury’s smaller Dairy Milk Chocolate bar with the new shape resulted in the customers’ criticism in October, 2012. Despite the reduced size, the price was left unchanged; that is, by reducing the cost and keeping the price unchanged, the firm received higher profit. However, according to Cadbury, it was not true since the increased price of sugar also increased the cost of production.
Cadbury Dairy Milk chocolate bar with its shape
The firm’s responsibility was to increase the profit in a lawful manner and return its profits to the stakeholders. Assuming that the price of the raw materials remained similar, the decreased size of the chocolate, which reduces the amount of raw materials required to produce each unit, surely benefits the firm by reducing the variable cost. However, this is rather bitter for the consumers who should pay the same for less “sweetness”.
Nevertheless, not only Cadbury, but also many producers including Mars reduced the size of their products. How can Cadbury win their battle of consumers’ perception? According to the report, chocolates with rounded shapes are perceived to be sweeter; in fact, Cadbury chocolates had been said to be sweeter after changing their shapes. This may be opportunity for Cadbury to overcome its customers’ criticism by reducing its sugar contents while retaining the rounded shape of the chocolate bars. The chocolate will still be sweet due to its rounded shape, while the cost of producing chocolate bars will be reduced. Furthermore, Cadbury may develop its point of difference by associating the reduced sugar content and consumers’ health. This will be where business becomes sweet!
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References:
1. “Cadbury cuts the size of Dairy Milk chocolate bar (but keeps the price exactly the same!)” written by Sean Poulter in October, 2012
2. “Cadbury Dairy Milk: why rounded chunks of chocolate taste sweeter” written by Amy Fleming in October, 2013
