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All companies need to have some high-growth businesses mixed in with the slower-growing ones, although the ones that are high-growth and the ones that are slow-growth can change dramatically over time. That is one of the problems that all companies have, that nothing ever stays the same. These changes can arise from all sorts of things but for companies selling chocolate two obvious things to think about are fashion trends and dietary preferences. Luckily, these trends will probably be different in different parts of the world, so that geographic spread (i.e. selling your chocolate to a variety of different countries) is a good idea and part of the portfolio spreading of risks.

'chocolate sales might have peaked in Western countries'

Supposing that the Western obsession with ‘Size Zero’ means that young women in developed countries don’t buy chocolate any more? It might make perfect sense to move into the chewing gum market because these same diet-conscious young women might want to chew gum all day to keep from feeling hungry. There is also the obesity problem in rich countries and the rising criticisms of food companies for marketing fatty foods to children. You can see why chocolate sales might have peaked in Western countries while chewing gum has lots of growth potential.

Personally, I love chocolate and hate chewing gum. So are they just completely different customer groups? Is that how it works, like cats and dogs, so that people are either cat people or dog people – chocolate or chewing gum? Either way could be good news for Cadbury. If it really is like the difference between cat lovers and dog lovers, then Cadbury will be trying to gain new, extra customers from a different market segment and a lot of them will inevitably be Wrigley customers at the moment. If the same people often buy both, then Cadbury would be trying to sell a new product to their existing customers. At the moment it’s a product that those customers have to buy from a competitor company (Wrigley) because Cadbury don’t sell chewing gum. Bars of chocolate and packets of chewing gum are both small, quite cheap items to buy. They are sold from the same kinds of outlets. You can see why Cadbury thinks it knows how to do this.

So now war has been declared. Cadbury is going to compete directly for Wrigley’s customers head-to-head.

'the big retailers are very important in this battle for market share'

Competitive strategy can be great fun. You can think of it as a war game or a game of chess – depending on your preferences. In terms of competitive strategy, Cadbury will be attacking Wrigley as the market leader in chewing gum. Instead of tanks and guns they will be battling it out with brands (established versus new), marketing campaigns, customer loyalty, discounts to retailers and fighting over shelf space in supermarkets. The big retailers are very important in this battle for market share. Whose chewing gum will they want to sell: Wrigley’s or Cadbury’s? And anyway, why would anyone want to buy chewing gum from a chocolate company?

I think I’d rather go down the gym.

Futher reading

• Competitive advantage - how can companies gain the upper hand?
• The chewing gum war - the two dominant players are fighting for their market shares
• Join the discussion - do you think Cadbury will suceed in the chewing gum market?

About the author

Susan Segal-Horn is Professor of International Strategy at the OU Business School. Susan's research focuses on international service industries and service multinationals, and she has published a number of books.

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