Somewhere around the middle of last year, Cadbury launched the Dairy Milk payday commercials (here, here and here) in India. The commercial was done in a retro style with a song – inspired from the 1952 Kishore Kumar pehli taareekh song – and dance routine; O&M are the creative minds behind the campaign. The commercial is an extension of celebrating moments of joy campaign that Dairy Milk has launched over the years – kuch meetha ho jaaye, pappu pass ho gaya, miss Palampur. It intends to introduce another moment of joy in one’s life.

According to Cadbury Marketing Director:

… the new TVC highlights the celebratory occasion of pay-day, which is an important event in the life of every middle-class Indian.

and O&M Creative Director

… the first of every month is the day everyone feels rich and in the mood to indulge.

as also

Pay day emotes feelings that are naturally celebratory in nature.

The intent of the campaign according to Cadbury seems to be to reinforce an already existing behavior of Indian consumers of celebrating payday or existing need for celebration of it.

In the follow-up, the campaign was mocked by a Nestle Munch’s aaj dusri taareekh hai commercial, which emphasized that chocolates can be had any day of the month and not just the 1st and thus implying that pay-day is not important as Cadbury made it out to be.

Brand wars are not uncommon, but in the chocolates segment this is probably the first in India (or the world?). And unlike most brand wars, these two brands were fighting over their views on consumer behavior with respect to consumption of chocolates, and not much about claims about whose proposition is better (for e.g. the recent detergent wars by HUL – more on that later).

Of course, what is of interest is to learn who among the CDM (Cadbury Dairy Milk) and Nestle Munch has a more correct view about consumer behavior. But even elementarily, why would Cadbury raise it’s stakes on Indian consumer’s behavior? Let us try to answer the latter first, and then come back to the former.

Bet on Indian Consumer’s Behavior

  1. The Revenue Argument
    • The naive answer as to why CDM brand’s proposition was extended would be to increase revenues. There are essentially, three broad ways that a company can organically boost its revenues: add new geographies, add new products/ segments and increased sales of existing products/ segments. The effort by Cadbury is of the last kind. It can be executed by having an intensive distribution of CDM and/or by fostering usage of CDM from existing consumer.
    • The former would help Cadbury reach the kind of the “first-time” consumer and increase penetration with “new” consumers – the kind who would be coming out of poverty, as Indian economy grows at above average rates, assuming existing consumption patterns don’t change. Since Cadbury chose the latter, it can be implied that having a intensive distribution, didn’t do the trick for CDM, most probably because existing consumption patterns changed to offset the benefits from acquiring “first-time” consumers.
    • The existing consumption patterns could have changed due to factors like – rising consciousness about calorie intake, increasing incidence of Diabetes, substitution with sugar-free chocolates, etc. All these would have made Cadbury to fall-back on some behavior of Indian consumers which would give them the needed revenue uptick.
  2. The Brand Saliency Argument
    • According to Cadbury, the CDM brand promise is of happiness, and celebrating moments of joy is a natural extension of it. The pay-day is just one of the events, which as they conjecture is celebrated and hence strengthens the brand’s proposition. There are better ways of improving the brand saliency, such as launch of new products (such as CDM Silk recently), association with events/ shows which make consumer happy, etc. Also, improving brand saliency would imply running a campaign which is more general than restrict to specific message of pay-day, considering that cost of such campaigns usually run into tens of crores for a month or so.
    • While brand saliency benefit would have been expected out of the campaign, the message of the campaign and its execution, indicate that that benefit was not the prime decision criteria.

Mis-calculated Bet?

This isn’t the first time that Cadbury has played a gamble on consumer behavior. The shift would probably have happened when Cadbury defined its market as of “sweets” rather than only of “chocolates”. What followed were commercials which urged celebrating the Indian festivals like Diwali and Raksha Bandhan. Whether Cadbury grabbed market share of “sweets” or ended up expanding the “sweets” market, the gamble most likely paid off considering that the commercials resume around the time of those festivals every year. Also, several other factors, such as concern over freshness/ adulteration of purchased traditional sweets, lack of time to make traditional sweets with increasing number of dual-income families, etc would have ensured that the odds against Cadbury were not too high.

However, with pay-day commercials did Cadbury put it’s eggs in the wrong basket, as Nestle Munch’s response suggests? The accurate answer to this question warrants a thorough empirical investigation. As any such investigation isn’t in the public domain, an analytical investigation can be used shed some light on the issue.

  1. Is 1st of the month really the pay-day?
    • Most salaries are typically credited at the last working day of the month and not on the 1st of the month, as the commercial assumes. It can be argued that in some companies the salaries are not credited but distributed. While this is true it doesn’t imply that the salary is given out on 1st of month. In fact, in the author’s personal observation with such business entities, salaries tend to be paid out beyond the 1st of the month (typically 7th or 15th of the month)
    • Indeed, while salary day was the motivation, the execution fails to convey the intent well. This indeed is a technical issue, but holds significance with respect to subject, because of explicit reliance of the communication on 1st of month metaphor for pay-day
  2. Is pay-day really that significant?
    • It would be naive to assume that Indians (or for that matter la gente del mundo) don’t look forward to their pay-day, whether it is 1st of the month or not. What is however debatable is if the eagerness of anticipation rivals some of the other eagerness’ which surround human beings such as that of a weekend, favorite IPL team’s scores, results of kid’s exams, declaration of performance ratings at work, etc
    • It would not be incorrect to state that the eagerness of anticipation of pay-day would be proportional to the relevance of salary in addressing the concerns a person faces daily; like that of paying of bills, buying that present for the kid/ spouse, savoring the popular new flavor of ice-cream, recharging of one’s prepaid account for an overnight over-the-phone chat with one’s boyfriend/ girlfriend, buying the latest spoilers for one’s motor-bike, etc. It can be inferred that the actual object of happiness is not the salary. It is only a medium towards a more significant/ relevant end. The commercial reduced these objects to receipt of salary
    • Also, these objects of happiness are dependent specifically on wealth and indirectly on income (or salary), which fosters the former. One could actually enjoy these pleasures any time (of the month/ year) if one has sufficient wealth. If one lives hand-to-mouth and does not have enough wealth to do so, we can surmise that the commercial would probably not even be able to carry it’s message such a consumer segment
    • Besides, except for those engaged in selling, 1st of Month would be just another day at work for most people and would pass by unnoticed

All this does not imply that there would not exist some micro-segment, whose salaries get credited on 1st of month, which would attach above-average significance to pay-day. However, to tap into such micro-segments, BTL efforts (which Cadbury planned to do but alongside the pay-day theme) would be more justified. Spending tens of crores* on ATL efforts in 8 weeks, (more than a percentage point of Cadbury India revenues for which it would need to sell an additional few crores of the CDM units to break-even) to tap into micro-segments does not seem to prudent.

It does appear that Nestle Munch’s take on consumer behavior trumps CDM’s point of view.

The commercial which has now been withdrawn, made appearance as a 10-second spot around the 1st of the month for a while in 2009 and then resumed in March 2010. It however did seem to run its course of 8 weeks. These are most-likely bursts to spur consumption from the micro-segments without incurring huge costs and/or to boost off-takes with distributors.

In Conclusion

Business decisions are difficult, more so for a market leader, even more so in the Indian context. There is a pressing need on managers in such firms to defend turf as well as find that next vine of revenue to which the company can hang on to and maintain revenue market share. Some like HUL go aggressive to defend turf with PureIt and Rin (more of it in other post), some like Parle seek newer sources of revenue by expanding into adjacent categories like snacks; Cadbury chose to modify/ exploit consumer behavior. As increasing awareness of obesity and health concerns, drives consumption towards lighter chocolates, kind of products which Cadbury lacks in its portfolio, the manager’s choice was most likely governed by constraints than the objective(s). However, doing very little but enough (or even doing nothing) would probably have saved Cadbury money without costing them revenues and eventually benefited the shareholders as also sparing the TV viewers of a ill-entertaining commercial.

* Deduced ex-post from the length of the TV spots, time-of-day they were aired, association with programs and observation of channel coverage supplemented by author’s own experience with commercial spends

Update 1:

Cadbury has continued with the payday commercial till early Q1-FY2010-11. That was probably to support sales efforts i.e. they were bursts. Also, most Cadbury commercials have a long life. They are reused quite often for e.g. the festival commercials, the kuch khaas hai commercial.

They have come up with a new commercial this fiscal based on the shubh aarambh theme. This time they have combined the idea of sweetness with doing something new. The commercial cleverly links the excitement of doing something the first time (and the happiness of it going well) and the Indian (to be specific Hindu) tradition of feeding something sweet when embarking on something new. It is most likely to strike the necessary emotional connect to drive the necessary growth in usage and hence revenues.