Marketing Plan of Divine Chocolate - Essay Example

MARKETING PLAN Table of Contents Table of Contents 1 Executive Summary 1 Situation Analysis 3 Marketing Summary of Divine Chocolate 3 PEST analysis of Divine Chocolate 4 Competitor Analysis 5 SWOT analysis of Divine Chocolate 5 Success Keys 6 Managing Critical Issues 7 Marketing Strategy 7 Mission Statement 7 Generic Strategies 8 Strategic Direction 8 Marketing Objectives 9 Financial Objectives 9 Strategy Pyramids 9 Value Chain Analysis 10 STP strategy of Divine Chocolate 10 Marketing Mix 12 Recommendations 13 Budgets and Schedule 14 Controlling the market plan 14 References 16 Executive Summary Divine Chocolate, a UK based chocolate company, plans for a very unique marketing strategy aligned with Fair Trade business philosophy in which farmers in Ghana receive a better deal for their contributions to the company. To further in grow in market and increase its share in UK market, Divine Chocolate plans to become a global brand and to exploit the growing opportunities of increasing chocolates demands by establishing better relationship with customers. With Fair Trade, Divine ensures that farmers always receive a better deal for their contributions and that money invested for social good eventually supported entrepreneurs, farmers and co-operatives to access more capital for business. This Fair Trade will create a positive zeal among customers impacting their buying behaviour and driving Divine’s profitability. Divine will go for strategic marketing mix with focus on integrated marketing communication, competitive pricing, social media marketing, penetration pricing, segmentation, targeting and positioning strategy. The company expects that all these marketing strategies will help the company achieve higher marketing synergy reflected in performance and profitability, leading to 60 percent changes in the total turnover and relative gross profit at the end of first year. Situation Analysis Marketing Summary of Divine Chocolate In UK, the chocolate confectionary market has been witnessing steady growth of 5% and the trend is expected to continue till 2016. The UK chocolate market has reached nearly £4,000 billion in 2011, which was a 21 percent increase over a five year period (Sweet retailing, 2012). Based on Mintel’s (2012) findings, it is reported that UK chocolate market is expected to reach to £5,059 billion in worst case or £5,531 billion in best case (Sweet retailing, 2012). The market trend is outlined above. With a view to grab better slice of this emerging marketing opportunities, Divine Chocolate has strategized on its way of marketing chocolates by focusing on Fair Trade and ethical business. Founded in 1993 with the birth of Kuapa Kokoo which was a pioneering cooperative organisation initiated by cocoa farmers in Ghana, Divine promised its customers to bring a delicious Fair trade chocolate alternative (Ethical superstore, 2014). PEST analysis of Divine Chocolate Political Environment The marketing plan of Divine involves strict compliance with UK’s food and drug administration guidelines and EU’s Cocoa and Chocolate Products Regulations of 1993 (Kirkpatrick and Parker, 2007). The operations will be complied with other regulations, or amendments to previous regulations related to food safety, chocolate or confectionary contents, ethical requirements etc that are prevailing in UK. Economic Environments The marketing plan views that high population growth rate in UK will considerably affects the demand for Divine’s chocolates (House of Lords, 2008). Divine’s marketing will be affected by inflation rates and world’s economic growth or recessions too (Holden, 1995), apart from increasing consumer income, improvement in employment and increase in Fair trade sales. Social Contexts Since people in UK are becoming increasingly aware and concerned about diet, Divine plans to use genuine natural and healthy ingredients in chocolate. People in UK are bombarded with advice about suitable diets, and they are more likely to be influenced by the advice ‘eat five portions of fruits and vegetables a day’ (Angela, 2006). Technological Environments As innovations such as e-marketing, social media marketing and technology advances in communication and transpirations profoundly impact the marketing, Divine plans to combat with changes in the market. These can be better utilized if the management is able to afford for investing on them. Competitor Analysis UK chocolate market is fiercely competitive. Cadbury Ltd has maintained strong leading position in 2013 as its sales increased by an estimated 2 percent to reach to a total of £1.6 billion, whereas Mars Ltd remained as the second largest in Chocolate market with an estimated £1.3 billion in value sales (Euromonitor International, 2014). Nestle, Kraft Food etc are other competitors. SWOT analysis of Divine Chocolate Strengths Weaknesses Focus on Fair Trade Loyal supplier networks Resources are relatively expensive There are restrictions to the use of resources such as sugar, water and milk Legal and regulatory requirements Opportunities Threats Robust growth in chocolate confectionary market Increasing demand for sustainable and healthy small treat chocolates Wider support of NGO and other government related agencies for Fair Trade chocolate Rigorous competition among chocolate companies Increase of cocoa prices Internal analysis Divine plans to uniquely market its Fair Trade business approach by delivering the Fair-Trade premium to the Kuapa Kokoo farmers and by paying their 45 percent share of distributed profit and 2 percent of the turnover towards special projects to help Kuapa Kokoo (Annual Report, 2012). It plans to improve the relation with loyal suppliers by promoting farmers. It plans to take decisions regarding pricing carefully since price for cocoa, milk, sugar etc continues to increase. Divine Chocolate needs to ensure that its business practices are compliant to the rules and regulations related to food safety, food ingredients etc. External Analysis It is planned that Divine will focus heavily on healthy chocolates since consumers are becoming more aware about diet and healthy eating. The UK chocolate market has been steadily growing in previous years, and it was estimated to maintain similar growth trend till 2016 to reach to a total sales of £5,531 billion in best case (Sweet retailing, 2012). Apart from these opportunities, Divine receives wider supports from NGOs for its Fair Trade philosophy. One major threat is fierce competition in the chocolate market and the rise in cocoa price. Success Keys 1- Extensive focus on Fair Trade is a key to the competitive advantage and organisational success. 2- Quality enhancement at Divine Chocolate is aimed to help 65,000 farmer members of Kuapa to ensure that they comply with the social, environmental and farming standards to produce best quality and sustainable products (Annual Report, 2012). Managing Critical Issues An order-winning factor is an organisational element that can directly affect the success of a business, whereas an order-qualifying factor is not a major determinant of the competitive advantage (Slack, Chambers and Johnston, 2010). To achieve competitive advantage, Divine will strategically compete with other players in the market by communicating its prospective customers regarding its Fair Trade business. For this, Divine planned to carry out IMC to increase the marketing synergy. Marketing Strategy In order to ensure long-term profitability and higher level of competitive advantage, the plan proposes to build stronger relationship with customers and suppliers and thus to maintain customer loyalty. This is one basic component to the marketing strategy of the company. It also proposes to adopt STP marketing strategy by maintaining an integrated approach to marketing mix. Mission Statement Divine’s mission is to “grow a successful global chocolate company, owned by farmers, using the amazing power of chocolate to delight and engage and bring people together to build dignified business relations” (Annual Report, 2012). As this statement mentions, marketing plan aims to become a global brand, 2) foster the Fair Trade concept through farmers-owned business, 3) exploit the growing business opportunities of chocolate products, and 4) establish dignified relationship with both customers and suppliers. Generic Strategies For Divine, the main determinant of its success will be its attractiveness in the industry. Divine Chocolate is attractive in terms of its uniqueness as Fair Trade business, and this unique approach is one major component in the marketing plan. Divine’s strength depends mainly on product differentiation. This is outlined below: Target Scope Advantage Low Cost Product Uniqueness Broad – Industry Wide Price Leadership Strategy Differentiation Strategy Divine’s Chocolates are highly differentiated in terms of Fair Trade Narrow- Market Segment Focus Strategy (Low cost) Focus Strategy (Differentiation) Strategic Direction The marketing plan will be directed towards growth in terms of profitability and competitiveness. For this, the plan will initially study prevailing chocolate brands in the market, their pricing and relative position so as to decide on most appropriate pricing. To penetrate the market, a relatively attractive price will be fixed first. The product will be developed by considering Fair Trade aspects. Marketing Objectives Divine aims to build stronger relationship with customers, to maintain long-term profitability and customer loyalty. It also expects to increase the total turnover and profits by 20% in first year, 15 % by second and third year. Divine’s focus on social responsibility and its attachment to ethical chocolate will be the key foundation of this relationship. Unique tastes, genuine natural contents and nuts-mixed chocolates are Divine’s strategies to attract and retain customers and to keep them satisfied with the value expected. To hold market share, quality enhancement will be entrusted to marketing management. Financial Objectives In 2013, the total turnover was £7,531,000, with a gross profit of £1,658,000, for a 12 months period ending at June 2013. Divine expects to achieve 20% increase in its total turnover and gross profit in the first year. This growth can be achieved by strategic marketing activities such as effective communication, brand positioning etc. Strategy Pyramids Divine Chocolate presently uses large scale retailers such as supermarkets and hypermarkets for marketing its products. To achieve 20 percent growth in total turnover and to build stronger relationship with customers, Divine will continue to use large scale retailers to promote its products. Moreover, it will develop online-selling to reach wide market. The distribution strategy will be B2B- Business to Business, and it will cost relatively 5% of the total costs due to transportation, warehousing etc. Value Chain Analysis The value of Divine’s chocolates comes from the Fair Trade side of its business. Divine delivers outstanding value of unique chocolate products that are built on the concept of Fair Trade. This value will be from Fair Trade business concepts, unique tastes, genuine cocoa contents and Differentiated Chocolates. The value derives from manufacturing and marketing of the unique Fair Trade chocolates. STP strategy of Divine Chocolate Segmentation Strategy Marketing plan depends on push strategy to extensively advertise and to use aggressive personal selling to convince retailers to carry and sell its chocolates. Apart from this, plan will also follow pull strategy to stimulate consumer demand to obtain faster turnover in chocolate distribution (Lamb, Hair and McDaniel, 2011). Divine’s customers will perceive values of Fair Trade and genuine cocoa contents supplied form farmers in Ghana and this value perception will steer their purchasing behaviour. Based on value perception and customer value, plan believes that it will attract 1) school or college students, 2) youngsters and 3) household. Based on their behaviour about use of chocolates, buying occasions etc, it is expected that students prefer chocolates as their small treats at school or colleges, whereas youngsters including couples prefer chocolates for their leisure, parties, events and other entertainment purposes. Household customers buy chocolates for common family purposes (Bygrave and Zacharakis, 2010). Targeting Strategy To target school and college going students, youngsters and household, Divine plann will design, implement and maintain a strategic marketing mix thereby to meet the needs of these segments (Lamb, Hair and McDaniel, 2008). The targeting strategy of this plan will be mass market targeting so that all the groups will be targeted by taking care of their needs and requirements while designing and developing each chocolate product. Initially, chocolates will be priced comparatively ‘less’ due to penetration pricing strategy and it is less likely to cause price sensitivity. However, customers may become sensitive to price when Divine gradually increases the price. Positioning Strategy Though compared to competitors, Divine is positioned as a unique Fair Trade business. This will be the main focus of all marketing communication with a view to build competitive advantage. All the marketing activities of the company will be directed towards establishing or positioning the brand of Divine as a Fair Trade business. This will certainly lead people to think about ethical chocolate or social responsibility of the business while they think about Divine Chocolate. As Rafinejad (2007) stressed, for this purpose, Divine will start with a positioning statement so that its employees will be able to communicate right messages to customers. Marketing Mix Divine Chocolate will not compromise on quality of its chocolates. There are more than 65,000 Kuapa Kokoo farmers, and it will be an added advantage that these farmers will deliver fresh and quality cocoas directly from their farms. Moreover, its products are distinctive as Fair Trade chocolates. So, its chocolates will be moderately priced. It will adopt penetration pricing so that a small and attractive price will be initially fixed and will be slightly increased when the brand gets better positioned in customers’ mind. Apart from large scale retailers for distributing the goods, Divine proposes to facilitate online marketing, to send chocolates directly to customers worldwide through FedEx or other services. For promoting the business, integrated marketing communication (IMC) strategy will be adopted for carefully coordinating among various techniques of advertising and promotion. Social media networks will be used for promoting the business (Lipschultz, 2014). Recommendations The strategic marketing activities and other organisational changes are planned and implemented at Divine to bring about positive returns on financial strengths. The company expects to increase its total turnover and gross profit by 60 percent in the first and second year, 50 to 60 percent in the third and fourth year and 40 percent in fifth year. In 2013, the total turnover of the company was £7.5 million with a gross profit of £1.6 million, and it now expects to achieve a total turnover of 12 million at the end of 2014. A projected financial statement for five years is outlined below: Projected Financial Statements from 2014 to 2018   In £ 000   2013* 2014 2015 2016 2017 2018 Total Turnover 7531 9,300 11,000 12,500 14,300 16,500 Cost of Sales 5873 6500 7900 8900 10000 11000 Gross Profit 1658 2800 3100 3600 4300 5500               Other operating Expenses 1693 1780 1900 2100 2300 2400 Other operating income 80 85 120 140 140 160 interest payable and similar charges 20 25 40 45 40 35 Profit before Taxation 25 1080 1280 1595 2100 3225               *2013- ended at June -Taken from Annual Report 2013             Budgets and Schedule The plans propose to invest on Research and Development, technology and other social and cooperative activities, and for this purpose, it will find an additional amount of £2 million from bank loan. A brief scheduling of various activities is outlined below: Controlling the market plan To monitor the development of marketing activities according to the plan, Divine will analyze and assess whether each and every actions planned were achieved or not. The most apparent outcome of the market plan is the change on total turnover. As mentioned earlier, the company will achieve 20% and 15% increase in the total turnover in the first, and second to fifth years respectively. It is important at this stage to see whether this target has been achieved and it has considerably impacted on gross profit and net profits at the end of each financial year. The marketing department will also verify whether the plan has been successful in terms of customer relationship, building Fair Trade positioning and reputation among them. To achieve these targets, the marketing management will keep on ensuring that all the panned actions are carried out with supports of human capital available in the organisation. To meet contingencies and risks associated with marketing or economic fluctuations, the marketing management has planned to maintain a significant amount of reserve fund. References Angela, U, 2006, Young Children'S Health And Well-Being, McGraw-Hill International Bygrave, W. D and Zacharakis, A, 2010, Entrepreneurship, Second edition, John Wiley and Sons Ethical superstore, 2014, About Divine Chocolate, Ethical Superstore, Retrieved from http://www.ethicalsuperstore.com/products/divine-chocolate/ Euromonitor International, 2014, Chocolate Confectionery in the United Kingdom, Euromonitor International , Retrieved from http://www.euromonitor.com/chocolate-confectionery-in-the-united-kingdom/report Holden, K, 1995, The UK Economy Today, Manchester University Press House of Lords, 2008, The Economic Impact of Immigration: 1st Report of Session 2007-08, The Stationery Office Kirkpatrick, C.H and Parker, D., 2007, Regulatory Impact Assessment: Towards Better Regulation?, Edward Elgar Publishing Lamb, C, Hair, J and McDaniel, C, 2011, Essentials of Marketing, Seventh edition, Cengage Learning Lipschultz, J. H., 2014, Social Media Communication: Concepts, Practices, Data, Law and Ethics, Routledge Rafinejad, D, 2007, Innovation, product development and commercialization: case studies and key practices for market leadership, Illustrated edition, J. Ross Publishing Slack, N, Chambers, S and Johnston, R, 2010, Operations Management, Sixth Edition, Prentice Hall Pearson Education, Inc Sweet retailing, 2012, UK Confectionary market update, Sweet Retailing, Retrieved from http://www.sweetretailing.co.uk/index.php/confectionery_advice/view/uk_confectionery_ market_update_mintel_2012 Trading Economics, 2014, Ghana GDP Annual Growth rate, Retrieved from http://www.tradingeconomics.com/ghana/gdp-growth-annual Read More