INTRODUCTION

One of the crucial aspects in which managerial economics differs from pure economic theory lies in the treatment of risk and uncertainty. Traditional economic theory assumes a risk-free world of certainty; but the real world business is full of all sorts of risk and uncertainty. A manager cannot, therefore, afford to ignore risk and uncertainty. The element of risk is associated with future which is indefinite and uncertain. To cope with future risk and uncertainty, the manager needs to predict the future event. The likely future event has to be given form and content in terms of projected course of variables, i.e. forecasting. Thus, business forecasting is an essential ingredient of corporate planning. Such forecasting enables the manager to minimize the element of risk and uncertainty. Demand forecasting means estimation of demand for the good or product in the forecast period. The past data are systematically combined in a predetermined way to obtain the estimate of future demand. For getting a practical knowledge on demand forecasting, I have chosen CADBURY DARIY MILK as a product in this report. I have taken this product because Cadbury dairy milk chocolate is loved by people of all ages. Cadbury Company is having a huge demand throughout the years ago.

PURPOSE OF REPORT Study the trend of customer for Cadbury dairy milk product during the year of 2005-2009 Percentage change, in sale growth rate of Cadbury dairy milk. Comparison of product with its competitors. Working out on trend or projection of the sale for future of 5 years.

GEORGE CADBURY FOUNDER OF THE TRUST 1839 1922

Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. We create brands people love - brands like Cadbury . Our heritage starts back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then we have expanded our business throughout the world by a programmer of organic and acquisition led growth. On 7 May 2008, the separation of our confectionery and Americas Beverages businesses was completed creating Cadbury place with a vision to be the world's BIGGEST and BEST confectionery company.

Introduction of Company Cadbury Cadbury is a multinational company and the Cadbury dairy milk is a brand of chocolate which is made by Cadbury. Cadbury made different types of chocolates and other products which are sold in several countries around the world. It first sold its products in United States in1905. History Cadburys started as a one man business, opened in 1948 by a Quaker, John Cadbury, which becomes nowadays Cadbury Limited, and now becomes the worlds largest chocolate producers. In 1831 the business had changed into grocery shop and John Cadbury became the manufacturer of the company. Cadbury Dairy Milk is a worldwide brand of chocolate of United Kingdom Which made its different types of products and promotes in different countries like Pakistan, India, Italy, Canada, and France almost all countries.

Product Varieties Cadbury made different types of chocolates and other products like: CADBURY DAIRY MILK 5 star Perk Celebration Temptation clairs Gems

SNACKS Bytes

Selection of product From above of these products I select the Cadbury dairy Milk chocolate which is the one of product of Cadbury. In 2003 Cadburys made Dairy milk into super brand, bringing a number of different products under the name dairy milk branding for example dairy milk with bubbles. Production of Cadbury Dairy Milk chocolate

Many of the newer Dairy Milk Varieties are now manufactured in the Republic of Ireland,

France and Poland. Dairy milk Chocolate itself is also manufactured in France and these products are sold in the U.K and from U.K to all other countries.

Understand the Market place and Customer Needs Cadbury dairy milk chocolate understands the new market which is targeted. First it selects the targeted customers like Kids, Youths and then made products according to their needs. Cadbury Dairy Milk Chocolate made by company which offers to specific market, specific customers and also to all type of customers.

Marketplace also selected by Cadbury Dairy Milk according to customer needs and requirements.

History Early history In 1824, John Cadbury began vending tea, coffee, and (later) chocolate at Bull Street in Birmingham in the UK and sometimes in India. The company was later known as "Cadbury Brothers Limited".

After John Cadbury's retirement, his sons, Richard and George, opened a major new factory at Bourneville, five miles south of the city. In 1893, George Cadbury bought 120 acres (0.5 km) of land close to the works and planned, at his own expense, a model village which would 'alleviate the evils of modern more cramped living conditions'. By 1900 the estate included 313 cottages and houses set on 330 acres (1.3 km) of land. As the Cadbury family were Quakers there were no Public houses in the estate; in fact, it was their Quaker beliefs that first led them to sell tea, coffee and cocoa as alternatives to alcohol.

After World War I, Cadbury Brothers Limited undertook a financial merger with J.S. Fry & Sons Limited, another chocolate manufacturer. Merger The Cadbury Schweppes logo used until the demerger in 2008 Cadbury merged with drinks company Schweppes to form Cadbury Schweppes in 1969. Snapple, Mistic and Stewart's (formerly Cable Car Beverage) were sold by Triarc to Cadbury Schweppes in 2000 for $1.45 billion. In October of that same year, Cadbury Schweppes purchased Royal Crown from Triarc.

De-merger In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two separate entities: one focusing on its main chocolate and confectionery market; the other on its US drinks business. The demerger took effect on 2 May 2008, with the drinks business becoming Dr. Pepper Snapple Group Inc. Cadbury is selling its Australian beverage unit to Asahi Breweries.

Recent developments

In October 2007, Cadbury announced the closure of the Keynsham chocolate factory, formerly part of Fry's. Between 500 and 700 jobs would be affected by this change. Production transferred to other plants in England and Poland. In 2008 Monkhill Confectionery, the Own Label trading division of Cadbury Trebor Bassett was sold to Tangerine Confectionery for 58million cash. This sale included factories at Pontefract, Cleckheaton & York and a distribution centre near Chesterfield, and the transfer of around 800 employees.

In 2009 Cadbury replaced some of the cocoa butter in their chocolate products with palmoil. Despite claiming this was a response to consumer demand to improve taste and texture, there was no "new improved recipe" claim placed on the label. Consumer backlash has been significant from many quarters, including environmentalists and chocolate lovers, with many consumers feeling that the company was merely seeking to improve profitability by using cheaper ingredients and reducing the weight of their chocolate bars in a disguised manner.

COMPANY PROFILE

Type Industry Founder Headquarter Product Employees Parent

Subsidiary of Kraft foods Confectionary 1824 London, United kingdom Many products 71657(2008) Kraft product

Website

Cadbury.co.uk

SWOT ANALYSIS OF CADBURY

Strength 1. Cadbury is a company, which is reputed internationally as the topmost chocolate provider in the world. 2. The brand is well known to people & they can easily identify it from others. 3. Cadbury the world leaders in chocolate, is a well-known force in marketing and distribution. 4. Users have a positive perception about the qualities of the brand. 5. Cadbury main strength is Dairy milk. Dairy milk is the most consumed chocolate in India.

6. By using popular models like Cyrus Brocha, Preety Zinta and others Cadburys has managed to portray a young and sporty image, which has resulted in converting buyers of other brands to become its staunch loyalists. 7. Cadbury has well adjusted itself to Indian custom. 8. It has properly repositioned itself in India whenever required i.e. from children to adults, togetherness bar to energizing bar for young ones etc.

Weaknesses 1. There is lack of penetration in the rural market where people tend to dismiss it as a high end product. It is mainly found in urban and semi-urban areas. 2. It has been relatively high priced brand, which is turning the price conscious customer away. 3. People avoid having their chocolate thinking about the egg ingredients.

Opportunities 1. The chocolate market has seen one of the greatest increases in the recent times (almost @ 30%) 2. There is a lot of potential for growth and a huge population who do not eat chocolates even today that can be converted as new users.

Threat 1. There exists no brand loyalty in the chocolate market and consumers frequently shift their brands. 2. New brands are coming and existing brands are introducing new variants to add up to an already overcrowded market.

DEMAND FORECASTING

Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market.

OBJECTIVES OF DEMAND FORECASTING 1. Helping for continuous production. 2. Regular supply of commodities. 3. Formulation of price policy.

4. Arrangement of finance. 5. Labor requirement.

TYPES OF FORECASTING: 1. Short Term 2. Medium Term 3. Long Term The time horizon of the forecast is classified as follows: Description Short-range Duration Forecast Horizon Medium-range Long-range More than 3 years

Usually less than 3 3 months to 3 years months, maximum of 1 year

Applicability

Job

scheduling, Sales and production New planning, budgeting development,

product

worker assignments

facilities planning

How is demand forecast determined? There are two approaches to determine demand forecast (1) the qualitative approach, (2) the quantitative approach. The comparison of these two approaches is shown below:

Description Applicability

Qualitative Approach

Quantitative Approach

Used when situation is vague & Used when situation is stable & little data exist (e.g., new products historical data exist and technologies) (e.g. existing products, current technology)

Considerations Techniques

Involves intuition and experience Jury of executive opinion Sales force composite Delphi method Consumer market survey

Involves mathematical techniques Time series models Causal models

Qualitative Forecasting Methods Your company may wish to try any of the qualitative forecasting methods below if you do not have historical data on your products' sales.

Qualitative Method Jury opinion of

Description

executive The opinions of a small group of high-level managers are pooled and together they estimate demand. The group uses their managerial experience, and in some cases, combines the results of statistical models.

Sales force composite

Each salesperson (for example for a territorial coverage) is asked to project their sales. Since the salesperson is the one closest to the marketplace, he has the capacity to know what the customer wants. These projections are then combined at the municipal, provincial and regional levels.

Delphi method

A panel of experts is identified where an expert could be a decision maker, an ordinary employee, or an industry expert. Each of them will be asked individually for their estimate of

the demand. An iterative process is conducted until the experts have reached a consensus. Consumer survey market The customers are asked about their purchasing plans and their projected buying behavior. A large number of respondents is needed here to be able to generalize certain results.

FACTORS INVOLVED IN DEMAND FORECASTING 1. Time period 2. Levels of forecasting -- International level -- Macro level -- Industry level -- Firm level 3. Purpose - General or Specific 4. Methods of Forecasting 5. Nature of Commodity 6. Nature of Competition

CRITERIA FOR GOOD DEMAND FORECASTING 1. Accuracy 2. Plausibility 3. Durability 4. Availability 5. Economy 6. Stability 7. Flexibility 8. Quickness

IMPORTANCE OF DEMAND FORECASTING

Planning and scheduling production Budgeting of costs and sales revenue Controlling inventories Making policies for long term investment Helps in achieving targets of the firm

DEMAND FORECASTING OF CADBURY DAIRY MILK Cadbury plan their production process by using a time series method as this help Cadbury to accurately produce the needed amount of chocolate at the correct period of time. A time series shows his historical data that can be used and analysed to predict future trend. Diwali and Christmas are peak selling time for all chocolate manufacturing including Cadbury, this is obviously because chocolate product make good gift for these occasion, time series analysis does not explain the causal relationship between variable and how they will be in future also. It simply assumes that past behaviour of the variable will be continue in future also. Hence time series analysis the trend to find out the fact to which affect the behaviour of the variable. The change in the variable over a period of the time is divided in to four components. They are Trends Seasonal variation Cyclical variation Random variation

INDEPENDENT VARIABLE AFFECTING DEMAND OF CADBURY DAIRY MILK

Price: This product is a brand loyal product, so if there is a slight increase in the price, the demand of the product will remain unaffected. But if there is a decrease in the price, the demand of the product may slightly increase.

Income: If the income of the people increases, the demand of the product also increases and if the income of the people decreases, the demand of the product decreases because then people will go for lower price chocolate like clair or melody of Rs.1 or Rs. 2. So, there is a positive relationship between income and the product demand.

Competition: There are many competitors like Cadbury 5-star, Nestle Kit-Kat, parle chox, foreign chocolates (Chinese Chocolates), lotee etc. in the market soif the price of the competitors increases, the demand of the dairy milk also increases. But if the price of the competitors decrease, the demand of the dairy milks not much affected by it.

Population & Age group: This product is meant for the children, adults and also for the old people so the age groups are not much affected the demand of the product so demand remain same and by the increase in the population, the demand of the product also increases.

Consumers taste and preferences: Cadbury produced milk chocolates by using the high quality of cocoa bean and the taste has still remained the same which has touched the heart of the consumers. So, they will not like to go for any other product.

Price of Complementary Goods: Cadbury dairy milk is made from the milk, sugar, cocoa bean and cocoa powder. If the price of these complementary goods increases then there will be no change in the demand. Because Cadbury dairy milk isa brand loyal product so there will not be any effect on the demand of the product.

Advertisement campaign: Advertisement campaign has played a vital role in attracting the major part of the population towards the Cadbury dairy milk. It was through this campaign like Real Test of Life & Kuch Meetha Ho Jaye that Cadbury shifted its focus from kids to the all age people and later through Khanewalon Ko Khane Ka Bahana Chahiye & Pappu Pass Ho Gaya,

Celebrations & Occasions: During the festivals and occasions, the consumption of Cadbury increases because its a product for enjoying the taste of each and every moment with harmony.

COMPITIORS Nestle Munch Britannia Parle chore Foreign chocolates Hershey

Sales
7000000 FIRS T OBJ ECT: 6000000 5000000 4000000 3000000 T 1000000 U D Y ING THE TREND OF CUSTOMER FOR CADBURY CHOCOLATE DURING THE YAER 2005-2009 0 2005 2006 2007 2008 2009
Sales

S 2000000

Cadbury dairy milk made position of it product chocolate not only in the minds of consumers but also in the market. It means what is the view of consumers or concept about of product like trough adds childrens and youngsters view and action after seeing the ad of your product. YEARS 2005 2006 2007 2008 2009 SALES ( Rs. CR.) 879.78 1058.24 1293.47 1588.59 1934.37

sales in cr.
2000 1500 1000 500 0 2005 2006 2007 2008 2009 sales

INTERPRETATION The above column diagram shows the total sale of the Cadbury chocolate during the year of 2005 -2009. The y-axis represents the annual sale and x- axis represent the respective year of the sales. In year of 2006 the sale of Cadbury chocolate had slide increase but following to the next year it declines i.e. in year 2007.

SECOND OBJECT

 CALCULATING THE PERCENTAGE CHANGE IN GROWTH RATE OF SALE

YEARS

SALES Rs. CRORE. (Y) 879.78 1058.24 1293.47 1588.59 1934.37 Y=6754.45

X2

XY

2005 2006 2007 2008 2009 N=5

1 2 3 4 5 X=15

1 4 9 16 25 X2=55

879.78 2116.48 3880.41 6354.36 9671.85 XY=22902.88

The equation for the straight line trend is Y = a + bx a=constant variable b= Rate of growth The Y intercept and the slope of the line are found by making substitutions in the following normal equations:

a=y/n
6754.45/5= 1350 b=xy/ x Substituting the above values in the normal equations: 6754.45/5= 1350 22902.88/55= 416.416

By solving the above equation,

a = 1350, b = 416.416 The growth rate of the sale is 416.416

THIRD OBJECT Trend projection of the Cadbury chocolate sales for the next 5 years i.e. 2010-2014 Based on analysis of past sales patterns Shows effective demand for the product for a specified time period The trend can be estimated by using the Least Square Method Therefore, the equation for the straight line trend is Y=1350 + 416.416X Using this equation we can find the trend values for the previous years and estimate the sales for the year 2001 as follows:

Y 2010 2011 Y 2012 Y 2013

= = = =

1350+416.416(1) 1350+416.416(2) 1350+416.416(3) 1350+416.416(4)

= = = =

1766.416 2182.832 2599.824 3015.664

Y 2014 Y 2015

= =

1350+416.416(5) 1350+416.416(6)

= =

3432.08 3848.496