Cadbury Case Study

Cadbury, a British multinational confectionery company, was launched by John Cadbury in 1831. Cadbury started its India operations in 1948 by importing chocolates. It is a significant player in the Indian chocolate market taking up more than 70 per cent of the market share. Every month they sold thirty million bars of Cadbury Dairy Milk chocolate bars. The Brand Trust Report, India Study, 2011 published by Trust Research Advisory ranked Cadbury in the top 100 most trusted brands list (Trustadvisory.info). It is one of the best-managed companies and best workplaces in India, and a highly trusted and respected brand.

1.The background of crisis.

On October 3rd 2003, just a month before Diwali, two bars of Cadbury Dairy Milk Chocolate were found infested at a shop in Mumbai. Maharashtra Food and Drug Administration (FDA) get complaint from consumer, who seized the chocolate stocks manufactured at Cadbury’s Pune plant. An inquiry was setup by the FDA to investigate into the infestation complaints, to determine whether this was a stray incident or is it one to add to the numbers. There is a clear message in every media, which is there were worm inside Cadbury chocolates and it became a major subject of discussion for the next ten days. There have 1000 newspaper articles and 120 TV news reported in 10 languages. Consumers started to against Cadbury and there is a symbol of disrepute and blame within these few days. Cadbury made a statement and announced, “the hygienic conditions in the factory are more than satisfactory; it is impossible for infestation to occur during the manufacturing process” and poor storage at the retailers was the most likely cause of the reported case of worms. However, FDA said defective packaging is the reason of worms got into the chocolate at the storage level. That was followed by allegations and counter-allegations between Cadbury and FDA (Buri and Clark).

2. The difference phases of conflict life cycle.

Cadbury is failed in the proactive phase. This news was first carried by CNBC and Cadbury had not heard anything directly from the FDA. Therefore, they did not have any strategy to solve this incident. Therefore, Cadbury should have the approved procedures early to responding in a timely manner and protecting the company.

After the incident, the sales of Cadbury were crashed by 30 percent. In strategic phase, a research was conducted among 200 consumers in 7 cities and the result was more than half of the consumers would not buy Cadbury’s chocolate. They decided to accept the truth about the infection and started to plan the strategies to face this crisis. Cadbury took position to face litigation, boycott or other event. They had planned some strategies such as changed the packaging, organized media conference, deal with workers and skate holders and looked for a brand ambassador.

Cadbury was very successful in reactive phase. First, Cadbury took action to gain back the trust from employees so that leader and employees can unite together to solve the crisis. Next, Cadbury changed their packaging due to they accept the truth of the infection is from the storage condition. In addition, Cadbury held a trust campaign to gain back the confidence from consumer by highlighting the steps taken. Lastly, Cadbury chose a brand ambassador to promote the safety of consuming the chocolate bar. After these strategies were done, there was a significant upwards movement of data on company image, responsiveness of the company, and intention to buy Cadbury chocolates.

Lastly, Cadbury did well in recovery phase as well. A toll free number and an email id were created for consumers to contact the company directly in case of any complaints. In the first day, Cadbury received 158 calls and 60 emails. It showed Cadbury was caring and gave effort to strengthen the commitment of the company and reiterate confidence of retailers (Buri and Clark).

3.Strategies to handle the crisis.

After these recalls and major incident, sales and consumers of the company started dropping. Cadbury needed to do something to regain their customer’s trust. They needed to come up with crisis management and stunts that would assure the consumers that it was safe to eat Cadbury’s chocolates and help them achieve better sales and profits.