Wouldn’t it be surreal if someone just handed over a blank cheque to you? You could fill any amount in the cheque and withdraw just about anything.
This is the kind of stuff that movies are made of, no?Â
Well, nuh-uh. Movies are inspired by real-life, after all. And, this has been both the secret of success and the reason for failure for Cadbury’s parent company, Mondelez (or Kraft Foods) across different geographies.
Kuch Meetha ho jae?
The association of "Meetha" and Dairy Milk seems so normal, right?Â
But it has not always been the case. The reason why we associate Meetha with that shiny purple wrapper; the reason why Dairy Milk is a mandatory meetha in festivals is because the global team of Kraft Foods decided to give a blank cheque to Dairy Milk back in 2010.
In 2010, Kraft Foods acquired the Cadbury brand which had built its Indian business to $400 mn in 40 years. In the initial visits made by Kraft Foods in the country, they set a near-impossible task for the management. They had to grow the business by 25% (to half a billion dollars) in just one year!
But they weren’t as heartless. Flushed with cash, Kraft Foods removed all the monetary constraints. The sky was the limit now. Here’s how Cadbury strategised and executed:
> They realized that Cadbury Dairy Milk was pretty popular, gave good margins, and was also the most important area of Cadbury’s India business. So they focused most of the attention to grow this brand.
> Drilling down further, they realised that the shops that had visi-coolers (those tiny fridges that tempt us to buy chocolate) gave 15% higher sales than those that did not. So, the team doubled the distribution of visi-coolers from 20,000 to 40,000.
> They also followed the basic expansion plan of increasing the number of distributors and display ads.
> And then came the masterstroke of brand positioning. Their ad expenditure was increased by 45%, and it elevated Cadbury from chocolate to a mithai.
Outcome?
2010 was the best year for Cadbury India in its lifetime in India. Instead of 25% revenue growth, they posted a 28% revenue growth. And they did not even spend as much as they had budgeted!Â
The best part is that the growth did not stop in 2010. The momentum continued and the company posted a 30% growth in 2011.
Just like in India, Kraft Foods adopted the blank cheque strategy with the brand Tang in other countries. Yet again, the result was a thundering success.
So basically, if your coffers are full, you'll always be a success story?
Um, nope. Kraft Foods failed with this strategy in Latin America.
Learning from Failures
Kraft Foods wanted to develop a nutritious and affordable product range for low-income Latin American consumers. The team obliged and created a range of affordable, tasty, and healthy lines of gelatin and pudding desserts. Yet, the product failed. Why?
Because it could not be correctly positioned in the mind of the consumers. What was the product really?Â
Adding to it, the model was not very cost-friendly.
Even after the failure, Kraft Foods promoted the leader of the failing team to head the snacks business in Brazil!Â
Woah, why? Because he learned from his mistakes and did not shy away from taking risks.
So what can we learn from the blank-cheque strategy outcomes? Here’s our take:
> When the practicality of situations holds us back, innovations and fresh ideas suffer. But thinking doesn’t cost us money, right? Don’t kill an idea before it even takes birth. Let it freely flow. Maybe you will find a way to execute it? (Tweet this)
> It’s important to make growth sustainable. If you have a free flow of cash, you could just spend it about anywhere. Imagine Cadbury giving the amount in freebies and discounts. Instead, it identified areas where a one-time expense got the ball of momentum rolling. Now, the company was creating extra revenues which it could reinvest in its own growth.
> Simplify. Sometimes the answer to your problem can be as simple as Meetha equivalent to chocolate. All that you have to do is cut the clutter (just like ReadOn does it for you everyday!).
After having established itself as one of the most popular chocolate brands out there, Cadbury is now all set to move to the snack-bar category in India. Will it once again capture our hearts?
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