Entering the Highly Competitive Chocolate and Confectionery Market - Case Study Example

Introduction This report is a marketing strategy that will highlight the marketing strategic plan that will allow the chocolate develop to a plan on how they will concentrate its resources in order to optimise the existing opportunities to achieve its intended goals of sales increase and sustain its competitive advantage (ALLEN, 2009). A strategic marketing strategy involves analysing all the short and strategic plan in the area of the company’s marketing activities that deal with the examination of the strategic initial business state of affairs in and the conceptualisation and devising, assessment and selection of appropriate market oriented strategies that will contribute to achieve the goals of chocolate and its marketing objectives (Ronald Ross Watson, 2012). This document will examine the chocolates SMART goals and objectives these objectives are the guiding principles for the chocolate and confectionery products that will enable them to achieve its goals, and also articulate the way that the company will pursue the desired performance results. The SMART objectives are the action play that will be used in directing the marketing objectives of the confectionery products company (O. C. Ferrell, 2012). This report will also examine the industry’s five competitor forces this forces include the threat of new entrants, availability of substitutes, the bargaining power of customers, competitors and the bargaining power of suppliers. Examining these five forces will enable the company to be able to come up with strategies that will enable the company navigate the market effectively and achieve in its profit objectives. By understanding the industry’s competitive forces, and its core causes will disclose the roots of the chocolate industry. The structure of the industry drives the level of competition and profitability in the industry, understanding the structure of the industry will go a long way in enabling the company to forge strategies that are in line with the industry effectiveness and place the company in the direction of becoming the market leader and the chocolate product of choice in the region. While, articulating the strategic objectives will be vital in ensuring the sustainability of chocolate and confectionery products business objectives, the strategies for the medium and short term goals, will be articulated to suit the strategic goals of the company while achieving the company’s immediate goals (Ronald Ross Watson, 2012). The industry’s effective will be examined in this report. The effectiveness of the industry will be based on the conditions of the company’s macro and micro environment. The internal and external forces facing the company will shape the direction that the company will take. While the company can influence the internal environment, it is widely vulnerable to the aspects of the external environment (Alexander, 2012). Hence, the factors of the internal and the external environment will determine the suitability of the company and its products to the operating environment. The nature of the operating determines the strategies to be adopted and the market objectives that the company will initiate. This paper will analyse the nature of the company operating environment that affects the company. The significance of carrying out market research will be examined this will be examined in the aspects of the goals of the company. Marketing research is carried out to establish the nature of the market and the existing market conditions. Market research will shape the company’s strategies in determining the strategies to adopt when the company is determining the market niche and segmentation objectives, pricing, segmentation, differentiation and positioning strategies (Ronald Ross Watson, 2012). These strategies are imperative in ensuring that the company’s products and services are available in the market and ensure that customers are utilizing the company’s products. The chocolate and confectionery products industry in Australia relies on the findings of the research in order to articulate the way forward because of the changing nature of the operating environment. 2. SMART Objectives The SMART objectives of the company will be driven by it guiding mission, the mission of the company will set the pace for the company to define its objectives and achieve its goals. The mission of the company is “to refresh the world, and inspire the nature of the human spirit, through creating value and making a difference in customers’ lives. Specific The company will want to become the market leader in its industry. The objective of the company is to become the industry best chocolate company Increase sales and improve the visibility of the company in the market (O. C. Ferrell, 2012). The growth objectives for the company will be to gain progressive relative market share for the next five years in order for the company to grow the company. The market share objectives for the company will be to gain 5% of the market progressively in the next 5 years. The company will always strive to improve its sales by at least 10% annually. The company intends to become a market leader for the chocolates and confectionery products in the long term. The timeline of the attainment of the objectives is set to be in line with the company introduction of the products in the market. The company will produce high quality products at the lowest possible cost. Measurable The objectives of the company will be achieved through aggressive marketing initiatives and adoption of proactive strategies. The company will carry out a review and analyses of the results attained in order to check whether they are in line with the attainable of the company’s objectives and on the time scale requirements of the company. The quality of the product will be measured on the basis on the set industry and international standards (O. C. Ferrell, 2012). Achievable Since this company is a new company, the set objectives of the company are attainable in the short term and medium. The goals and objectives set are within the company’s scope and feasibility of the company in attainment of the company’s objectives (Larry RICHMAN, 2011). The short term goals of the company are achievable within the time and scope requirement of the firm. The resources that will facilitate the attainment of the objectives is available, the company will use and utilize various marketing initiatives at its disposal to achieve its goal and objectives. Relevant The objectives of the company are in line with achieving the mission of the company. The overall objective of the company is “is to refresh the world, and inspire the nature of the human spirit, through creating value and making a difference in customers’ lives” (Douglas C. West, 2011). The attainment of this goal is hinged on the attainment of the specific objective of the company. The attainment of these objectives is in line with the attainment of the specific goals of the departments within the company. Time The attainment of the goals of this company is in a time bound. The attainment of the short term and medium term goals will progressively lead to the achievement of the company’s objectives. Hence, the 5 year short term goals of the company will be measured based on the time scale requirements of the company (Proctor, 2013). Each staff members and the department will be given a certain assignment whose goal, objectives and outcomes will be measured according to the time scale nature of the assignment, which is in line with the time scale and nature of the company’s objectives. 3. Competitive Forces The Australian chocolate and confectionery industry has remained resilient in the advent of global economic turmoil, the fall of consumers’ incomes, unstable commodity process among other things. The changing nature of the customers’ preference has made the industry shift its focus from the traditional chocolates to a more healthy based chocolate products (LA Hebden, 2011). This has made the industry players become more innovative in shaping their products to suit customers’ needs and requirements. The industry chocolate products are focussing their efforts on introducing new healthy products and their accompanying marketing strategies. In the developed world, customers are changing their preferences to suit their healthy and luxuries needs, there is increased indulge in higher priced products and premium products. In the five years to 2012, the revenue of the industry has been averaging at 2.3% annually. This section will highlight the industry’s competitive forces (O. C. Ferrell, 2012). Competitors The nature of the market in Australia is highly competitive. The Chocolate and Confectionery market are characterised by many competitors in the market. Although there are many competitors in the market the barrier of entry is extremely low, new entrants are encouraged to enter the highly competitive Australian chocolate and confectionery market (O. C. Ferrell, 2012). This company will have to take on Cadbury, which its products are the leading in Australia’s consumer market. The existence of numerous companies and products in the market means that buyers can easily switch from one product to the next. The numerous competitors in the industry create price wars, fight for limited fighting space, and customers. Threat of new entrant The threats of new entrant in the Australian chocolate and confectionery market is high this is facilitated by the low barriers of entry into the market. The new entrants in the market have to cope with the new changing preferences of customers, who now prefer healthier products and the high level of competition that exists in the market (Ronald Ross Watson, 2012). The barriers of entry in the chocolate and confectionery market can be viewed as the huge capital outlays that are required to enter the market. Consumers prefer to be associated and identified with brands in the market this can be viewed as another barrier of entry of the new companies. In the market penetration is extremely restricted because the market is dominated by existing companies. Availability of substitutes The availability of a substitute to the chocolate brands and confectionery is high. However, for premium chocolate products the traditional healthier chocolate products could be considered to be substitutes. For the traditional products, other snacks and biscuits can be considered to be substitutes (Proctor, 2013). The chocolate industry in Australia has a lot of substitutes that include candies, biscuits and other snacks. Australians are now more than ever demanding healthy products from manufacturers which mean they are willing and able to abandon unhealthy chocolates for healthier products like chocolates biscuits. Bargaining power of customers Australian customers are demanding the expensive and luxury chocolates than the cheap ones. The high competitive nature of the market makes the industry products less costly. The Bargaining power of consumers in the Australian market is high; consumers have indicated that they prefer healthier and luxury chocolate products this has made companies in the industry to change research more on healthier products, and introduce healthier products to the market. The large chains in the Australian market command a lot of influence, although there exists small retail buyers their influences is not significant (Ronald Ross Watson, 2012). Bargaining power of suppliers In the primary production of chocolate, the primary raw material includes cocoa bean, milk, and sugar. For the supply of sugar and milk, the suppliers are numerous. The numerous suppliers for these products are distributed all over the world, so there is neither concentration nor differentiation of the products (Douglas C. West, 2011). The manufacturers use techniques such as hedging to minimise the risk of large price fluctuations of the product in the global market. In the supply of cocoa, there are numerous cocoa plantations around the world, this means that the bargaining power of suppliers is low, but in the fine cocoa the bargaining power increases since its supply is limited. The macro and micro analysis. The macro-environment analysis The macro-environment analysis involves the analysis of the external operating environment that affects the industry. The nature of the operating environment involves the following; Legal environment The legal-operating environment is not restrictive in Australia. For the importers of confectionery products in Australia, the tariffs for is 5%, which is extremely low (Sivalsailam, 2010). The legal-operating environment in Australia is high favourable for businesses, in this industry the level of legal fees and representation required is extremely low. Economic environment The confidence level of the Australian population has been decreasing in recent years the population has greater pessimistic outlook than the optimistic outlooks over their economic growth (Aaker, 2012). This has affected the purchase of chocolate and confectionery products in Australia there has been a small drop in the purchase of chocolates and its confectionery products over the years. During the Easter period, the purchase of chocolates and confectionery products in Australia has increased by 3% when compared to recent years. Socio-cultural The preference of the Australian consumer is changing the nature of the consumer is in Australia is divided into value, busy and digital consumer. The value customers spending their money particularly carefully; busy customer; place their importance on the speed of purchase, simplicity and convenience (LA Hebden, 2011). The digital consumers place their importance on the relationship they have between brands. The culture of purchase of chocolates and confectionery products in Australia is strongest within the coldest months and during occasions, for example, Easter, Christmas, and Valentine’s Day. The value for money in the Australian consumers remains an essential choice factor in purchase decisions indulgence initiates the purchase decisions. In chocolate bars, three times more females than male partake them, while in bars over 100g two times more male than female take them (Sivalsailam, 2010). Technological environment The technological environment is characterised by adoption of new technologies this is meant to optimise the economies of scale in the production and achieve high production levels. The change in the preference of customers to healthier chocolates products has facilitated the uptake of new technologies. Natural environment In Australia, the chocolate and confectionery product industry accounts for almost 3% of the food industry. In the confectionery market, chocolate to about 65% of the market with chocolate bars, chocolate blocks, and boxed chocolates take about 42%, 26% and 10% of the market respectively (Sivalsailam, 2010). Micro-Environment analysis The micro environment includes factors within the company operations that might affect the delivery of products to the market. These factors includes the availability of finance, suppliers, company itself and marketing intermediaries (Proctor, 2013). The suppliers of fine premium cocoa products are relatively competitive finance is readily available in the industry, with finance and other non-finance banking institutions readily available to offer loans. The operations efficiency and level of production can also affect the delivery of products to customers. Marketing Research The importance of marketing research is essential in determining the level of pricing and distribution level in the market. The marketing research will highlight the importance of niche and segmentation marketing in the Australian market (Aaker, 2012). Segmentation and niche marketing enable the company to concentrate on a particular market in marketing for its products. In the distribution of products, the importance of marketing research will enable the company to determine the type of distribution strategy in the market. The distribution strategy in the Australian market involves two levels of marketing strategies, which includes the grocery and the route. In the grocery marketing strategy, account for about three thirds of the industry revenue. The influence that supermarkets and grocery chains have in the distribution of the company products in the industry is enormous this highlights the importance of the company in getting the grocery and supermarkets in its distribution chain. The route distribution strategy is varied and reduced that ranges from distribution stores, petrol stations and convenience stores (O. C. Ferrell, 2012). The number of convenience stores have risen in the past decade by 30% this shows very high distribution network. Marketing research enables the company determine the best pricing regime it can adopt either psychological pricing or entry pricing either way the prices of confectionery products and chocolates are determined by the market forces. The competitive nature of the markets makes the pricing of the products highly competitive the company cannot afford to prices the products higher than the market prices because the company wants to penetrate the market. Effective pricing regime needs to be adopted through market research (LA Hebden, 2011). The effective mass marketing strategies are essential in determining the level of brand awareness and brand positioning endeavours. Consumers tend to associate with certain products; hence, the company should focus on brand positioning schemes in order to place the product very high in the customers’ perception. Conclusion This paper highlighted the strategies that my company will adopt in entering the highly competitive chocolate and confectionery market (Proctor, 2013). The strategy marketing strategies involved analysing the market internal and external environment, the forces of the market and the marketing research endeavours that will determine the effective pricing, distribution, and market positioning techniques. References Aaker, D. A. (2012). Brand extensions: the good, the bad and the ugly. Sloan Management Review. Alexander, M. (2012). Management Planning for Nature Conservation: A Theoretical Basis & Practical Guide. Michagan, US: Springer. ALLEN, L. L. (2009). Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China's Consumers. Washington, DC: AMACOM Div American Mgmt Assn. Douglas C. West, J. F. (2011). Strategic Marketing: Creating Competitive Advantage. Oxford, UK: Oxford University Press. LA Hebden, L. K. (2011). Advertising of fast food to children on Australian television: the impact of industry self-regulation. Med J Aust , 20-24. Larry RICHMAN, P. (2011). Improving Your Project Management Skills. Washington, DC: AMACOM Div American Mgmt Assn. O. C. Ferrell, B. L. (2012). Marketing Principles. London, UK: Cengage Learning. Proctor, T. ( 2013). Strategic Marketing: An Introduction. London, UK: Routledge. Ronald Ross Watson, V. R. (2012). Chocolate in Health and Nutrition. Michigan, US: Springer. Sivalsailam, n. (2010). IBIS world Indutry Report; Chocolate and Confectionery manufactering in Australia. Washington DC: IBIS world. Read More