The Real Chocolate Company - Assignment Example

Introduction The Real Chocolate Company started off as a small enterprise trading in homemade chocolates but has since grown from strength to strength and has managed to establish various retail stores, of which franchise stores are many across US as a result of many factors. The company's success story is owed to its ability to uphold the philosophy of distributing high quality products that strive to preserve the essence of 'hand made' products in a bid to fulfil its goal of becoming a formidable, premier retail chocolatier in the United States. The company strategically positions its retail stores in tourist environments, regional malls, airports and entertainment oriented sites where it mainly targets outgoing people. Apart from a choice of about 300 chocolates, the company also offers an assortment of other confectionary products. However, its major challenge it is facing is the growing competition from other chocolatiers in the industry. External analysis Threats Usually, unfavourable elements within a business environment often threaten its viability and can lead to failure in some cases hence require concerted efforts to counter them. In this particular case, competition from other rival competitors is the major threat to the Real Chocolate Company. According to statistics by the National Chocolate Association, gourmet chocolates in particular account for about 10% of the chocolate industry and there are about 15 competitors in the industry. The major competitors of Real Chocolate Company are Godiva chocolatier with annual sales of five million, Russell Stover as well as See's Candies with an annual sales of five million. Stiff competition can often lead to saturation of markets which would also negatively affect the sales as a result of monotony likely to be created as a result of lack of choice emanating from flooding of the markets. Only very innovative companies stand better chances of winning the hearts of their trusted customers in such a scenario which is regarded as a major threat to the operations of a company's business. If the situation is not properly managed, a company can be easily kicked out of business through the loss of customers to competitors. The chocolate and confectionary industry must comply with numerous regulations that cover health, education, sanitary and franchise operations especially with regards to registration and privacy. Things such as labelling must comply with the Nutrition and Labelling Education Act of 1990. Whilst the laws are promulgated to protect the interests of the citizens, in some instances the provisions of some sections of the legislation may be a bit heavy especially on Small Scale Enterprises (SMEs) whose budgets may prohibit full compliance with some of the regulations. Such pieces of legislation often threaten the viability of small scale companies that are still trying to establish themselves in the market. For instance, the prescribed packaging for chocolates can be costly to companies still in their infancy hence it's a threat that needs to be given due consideration. Unfavourable climatic conditions can also negatively affect the chocolate industry in many ways. For example, adverse climatic conditions in areas where the crop which provides the basic ingredient in chocolate production is grown, can lead to negative growth in the chocolate industry. The cocoa bean is the main fruit used hence an outbreak of a disease in the areas where it is produced would mean a slump in production of chocolate. The world is also face with unprecedented climatic changes brought about by global warming. In the event that extreme weather conditions occur, production of cocoa is also likely to be negatively affected which translate into a decline in chocolate production. Natural environmental conditions are uncontrollable in most cases and their effects should not be undermined. Opportunities The Real Chocolate Company is also exposed to certain opportunities which can lead to growth of business. In this case, these include the use of franchise stores for retailing purposes. Franchise stores are advantageous in that individual stores are capable of attracting their own customers from niche markets which in turn contribute to the bulk of customers for Real Chocolate Company at the end of the day. These account for a large percentage of sales as the product would be sold in many retail outlets by various people. By virtue of giving retailing rights to the franchisees, the company stands better chances of market growth as its products would be sold at numerous outlets. This is a great opportunity which gives the company competitive advantage over others. The ability to penetrate global markets is another probable opportunity for the company. For instance, it has some stores in Canada which is highly recommended especially in the face of growing competition in US which is likely to result in a slump of the market as a result of saturation of chocolates. In such a scenario, global stores would continue operating which would keep the business afloat. Global businesses can stimulate growth if there are better fortunes in the international markets compared to the local markets. International markets often provide rich ground for investment as there is usually a tendency among local citizens to hold foreign products with high esteem. Internal Analysis Strengths The real strength of The Real Chocolate Company is its ability to maintain high quality in its products. It achieves this through the use of finest, highest quality ingredients and no artificial preservatives which have greatly contributed to its good reputation among the customers. By virtue of its ability to build loyal customers due to its reputable brand name, the company stands better chances of growing from strength to strength as there would be mutual understanding with its customers. When customers trust your products, then your company is likely to achieve great success. These customers in turn would positively identify with your product which creates loyalty in the long run. Loyal customers tend to be permanent customers who are strongly attached to your product hence the market base would be on a solid foundation unlike a situation where a company does not even know its customers. Successful brand names can also be attributed to the aspect of company's patent that is, its exclusive rights to its brand name. In short, the company is legally entitled to its brand name. Customers usually are sceptical to deal with companies which do not have reputable brand names for fear of buying substandard products. Therefore, where there is no trust, there is little in terms of business as the customers would have a tendency of shunning away from such companies. The positive image of Real Chocolate Company, coupled with the company's wonderful customer service and expertise in merchandising its chocolate products, gives it competitive advantage over other rival competitors which is a great strength in business. Weaknesses The company's reliance on use of marketing in store-promotions as well as point-of-purchase material as its primary means of marketing is one notable weakness which can undermine its reputable operations. In the face of growing competition, the company must strive to use other marketing techniques such as advertising, public relations and publicity in an effort to reach a wide range of potential customers in the market rather than relying on local audiences. In this case, it seems the company is greatly relying on mobile customers who in this case are outgoing people who happen to be doing their own business in busy areas where Real Chocolate stores are located. Its shops are mainly located in tourist attraction centres, airports, busy mall for instance. There is always business around these busy locations but the company ought to expand to other areas. The drive to expand to other locations is likely to be hampered by the absence of vigorous marketing strategies which is a major weakness that can derail the efforts of expanding in order to counter growing competition. Current Problem Diagnosis One of the major problems currently facing The Real Chocolate Company is the increasing stiff competition from other rival competitors in the chocolate industry. Thus, according to statistics by the National Chocolate Association, gourmet chocolates in particular account for about 10% of the chocolate industry and there are more than 15 competitors in the industry. The major competitors of Real Chocolate Company are Godiva chocolatier with annual sales of five million, Russell Stover as well as See's Candies with an annual sales of five million. Then, the problem question is: Can the company manage to sustain its growth rate in the face of stiff competition' On the other hand, the company lacks a coherent marketing strategy that can be harnessed in its endeavour to attract more customers so as to strengthen its business operations in the face of growing competition. The indoor strategies it uses are shallow in the sense of knowing exactly the interests of its customers which poses a challenge in attempting to satisfy their needs. Strategic Options There is need for the company to embark on market research in order to keep pace with the interests of the consumers as there are likely to be various changes taking place in the market in response to growing competition. This course of action will then determine the marketing strategy to be used which includes target marketing. This strategy encompasses the use of tools such as the marketing mix which is primarily concerned with how the product will be priced, distributed, or promoted as well as the communication structures that would be used in this endeavour to meet the targeted customers. Target marketing can be used in this particular case where the marketer tries to segment the market especially on the basis of age, income as well as geographical location. There is need to be innovative and try to identify the interests of each particular age group which can appeal to them which gives the marketer correct information when trying to satisfy these needs. Marketing mix will be concerned with product features that are likely to satisfy the needs of the customers. Therefore, marketing communication messages should be designed in ways that inform or remind the customers about the product thereby trying to persuade them to buy as well. This is one way of captivating the interests of the customers who may not be just influenced by impulse buying like the case with other products given that a chocolate is classified as a luxury product. Expanding the global market is another option that can be taken by The Real Chocolate Company as a way of maintaining sustenance in business in the event that the local markets would be flooded with almost similar products which may result in the decline of sales. International markets can bring about high sales as there is a tendency of consumers to rush for new products in the market. On the other hand, globalized markets tend to enjoy dominance over local markets if they are properly managed. Evaluation of Strategic Options Given the competitive environment The Real Chocolate Company is operating in, it will be highly commendable for it to adopt a strategic marketing orientation plan that is driven by customer focus, team work as well as recognition of the presence of competitors. By virtue of being customer focused, the marketer is in a position to discover the needs of the customer which can provide with the much needed information in satisfying those needs as one of the basic tenets of marketing. A team approach in this case entails an integrated network of different teams. What it means is that, there have to be cooperation among various stakeholders who may be involved in the marketing process. The final decision made ought to be informed by ideas and views generated right from the lower levels to the supreme decision makers who are the marketing managers in most cases. These decisions ought to incorporate the realization of competitors and their advantages over other companies as well as the strategies they use in their business operations. Description of Selected Strategy Concerted efforts should be made to discover customer needs so that satisfaction can be delivered. This can be done through embarking on market research that would be aimed at identifying the target markets then their needs. This is the first step that is normally done through segmenting the customers into different categories on the basis of social, demographic or economic factors. The researchers must be well equipped with tactics such as interviewing techniques as well as knowledge about their social background so as to solicit as much information pertaining to the needs of the customers as much as possible. Gaining information about a group of people requires effort driven and guided by a team spirit. Cross functional teams can be used in this activity of information gathering in a bid to develop customer solutions. Information gathered from retailers right up to the marketing management team ought to be incorporated as a way of trying to meet the needs of the targeted consumers. Surveys are useful in this case as a way of ascertaining the consumer behaviour and how they normally spend their money. This gives the marketer a clear picture of the correct strategy that can be implemented. This team approach is very effective in that it strives to incorporate various ideas which can be useful in building an effective strategy. This action plan also requires constant monitoring of the market so as to ascertain where the competitors seem to have an advantage. As highlighted in the case, The Real Chocolate Company is mainly facing the greatest challenge of stiff competition from its competitors in the industry. This requires bulletins that often carry important information about rival competitors such as their results or financial statements. Those directly involved in gathering this important information also ought to be given the freedom to attend important events sponsored by their rivals such as exhibitions. This allows the company to have first hand information about the strategies employed by their rival competitors. In the long run if the business delivers in satisfying the customer needs, profitability of the business can as well be enhanced through better customer retention as well as increased loyalty among the customers. Given sufficient resources needed in carrying out surveys about the customer needs, this strategy can be very effective as it attempts to increase sales while at the same time minimising threats which may be unfavourable to the company. Action Plan for Implementation Marketing research meant to identify customer needs is often done by recognised workers in marketing departments and decisions are made by marketing managers in most cases. It is the marketing manager's obligation to timeously respond to changes in the market that might also translate into changes in customer needs. Action in response to such changes ought to be implemented within the shortest periods of time so as to keep pace with market developments inorder to avoid being overtaken by alert rival competitors. After establishing the needs of the customers, immediate action should be taken at management level of the company. Action meant to correct the anomaly which may which may emerge from nowhere in the market should be implemented immediately and the decision makers in the company should take a leading role. Some companies often fail as a result of lack of information about the expectations of the customers which jeopardizes its operations as rival competitors would be out to capitalise on such weaknesses. Forecasts about market changes should also be carried out in the process of identifying the consumer needs that ought to be satisfied. These allow decision makers ample time to ponder on the market demands as well as the appropriate action that ought to be taken. The environment in which any business operates is dynamic and subject to change any time without notice. Changes in the economy such as recession cannot be easily resisted or avoided once they are around. However, such changes can be predicted in advance. It is the duty of the decision makers to keep an eye on such developments as they would have a bearing on their operations. Consumer buying would be affected in one way or the other. Therefore, appropriate action that takes into consideration such changes should be streamlined within the operations of the organisation so as to allow a gradual process of change in the long run. Conclusion Over and above, it can be noted that though Real Chocolate Company has been posting impressive financial results, it is in a predicament of facing stiff competition from rival competitors which may pose a threat to its growth initiative. However, competition is the order of the day in any business as companies compete for the same customers in some instances. Real Chocolate Company can extricate itself from this delicate situation by embarking on strategic marketing initiatives meant to give it a competitive advantage over other companies especially in this fragmented market it is operating in. The underlying principle is the ability to identify customer needs and try to satisfy them favourably. Target marketing is one other strategic course of action that can be taken by the company. Basically, the aim of strategic marketing is to attract, satisfy and retain target market customers. Reference BUS10009Business Strategy 2008-2009 Read More