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312MKT International Marketing: Audit of Capital Chocolate

Case study: Capital Chocolate Company

This assessment requires you to produce a marketing audit of Capital Chocolate based on the information in the given case study, in which you must:

1.Carry out an analysis of the marketing performance and effectiveness of Capital Chocolate in terms of two of the following:

.sales and market share
.objectives
.gap analysis
.effectiveness of existing strategies

2.Carry out an analysis of the marketing situation of the company, in terms of two of the following:

.segmentation
.portfolio analysis
.market and product life cycle
.competitive advantage
.positioning

3. Identify and explain the micro and macro environmental influences which are having an important impact on Capital Chocolate (two micro and two macro influences are required).

4.Produce a SWOT analysis for Capital Chocolate, summarizing the key factors impacting on the company.

Answer:

Introduction:

The current report is based on the evaluation of marketing strategies for Capital Chocolate Company. The report analytically takes into the consideration the market share and selling strategies adopted by Bill Wallace to reconstruct their production capacity. The report also discusses the market segmentation strategy along with the GAP Analysis to assess the areas where the company lacked. The macro and microenvironment analysis has also been conducted along with the SWOT analysis to further assess the factors affecting the strength and weakness of the company.

Sales and Market Share:

The market share for Bill Wallace is limited since the company only engages with limited number of customers. From the study, it is evident that the Bill Wallace largely sold its chocolate to retail customers, which accounted for the company’s retail store and hardly offered any kind of delivery service. In order to increase its revenue the company should focus on entering into the new market, which should be directed in the accomplishment of specific marketing objectives (Bickhoff et al. 2014). The current sales and market share for Bill Wallace has dropped due to the increasing competition from the competitors. Marketing objective of the company forms the part of comprehensive strategic objective. One of the prime of the company to regain its sales and expand its market share by collecting the information and trends related to the market of new territory in Scotland, which may enable the company to launch its business in those geographical areas. The survey identified that chocolate during the festive season had large number of last minute buyers. Currently the company has th


e average sales turnover of £1 million annually. The anticipated sales were £480,000 with the cost of sales being 80% of the total sales. Competitors on the other hand sold 500 gram of chocolate at £7.75 whereas Lindt’s chocolates sold for £6.95 and £7.85 at WH Smith’s stores.    

Furthermore, all the marketing activities of Bill Wallace should be directed in such a way that it reveals the core needs and requirements of the domestic consumers in order to enable Bill Wallace offer more allegiant product to their consumers. By doing so Bill Wallace will be able to distinguish among the big players of the market along with those who are already established in the market.

GAP Analysis:

Capital Wallace Company is not currently functioning well in the market since Bill Wallace has witnessed a significant amount of gaps in its qualitative and quantitative research. The GAP analysis depicts some discrepancies, which Capital must quickly take into the considerations. The current production ran around 700-1200 kilos weekly however, the company was short of its maximum production of 2,000 kilos. The company has a labour gap of adequate workforce and adding around three unskilled workers would help in attaining the desired level of production of 2000 kilos.   

Figure1: Figure Depicting Gap Analysis

(SourceBooth, 2016)

Technical Gap:

From the study, it is noticed that tactical gap in regard to the breadth of salience has been noticed. During its last production, it was noticed that the company incurred large number of cost of production (Booth, 2016). Furthermore, consumers do not perceive Chocolates of Bill Wallace as being a potential or something, which the consumers can take home and eat over the period.The current production of the Bill Wallace was estimated to be around 700-1200 however, the company has the capacity of producing around 2000 kilos. It can be said the company has somewhat been lacking behind technically in increasing its production capacity. Technically the sales strategy is experiencing decline as well with cost of production soaring as high as 80 per cent of the total selling cost and net profit falling to mere £24,000

Strategic Gap:  Strong awareness to marketing efforts but weak association with product:

From the analysis, it is found that the consumers feel that Capital Chocolates are is not well differentiated amongst the other chocolate brands. The chocolate brand is highly identifiable but the brand is only limited to specific consumers paying premium price (Grant, 2016). For examples consumers strongly associate with the chocolate products as gift during festive season and for Capital Chocolate there is limited number of customers which does not provide the brand with compelling reason or reminder for purchase. Upon conducting the survey it was found that out of 87 customers 15 were the retailers, 22 customers were business people who usually bought several packets for business gifts and the remaining were individuals who consumer for their own purpose. The company can increase its market share annually by 8 per cent if it undertakes promotional activities of selling its chocolate products at £3 for 500 gram box in an off store flowers.   

Gap in brand purpose:

The analysis lays down few gap in Bill Wallace brand purpose, which enabled important insights in to the strategic gaps. It is found that consumers were receptive to the idea of Capital positioning as a original brand as they felt that the image did not ideally suited its brand since they came across more warm and few products (Hollensen, 2015). It can be stated that brand needed more publicity and it should not be limited to the specific customers.

Segmentation:

With chocolate being widely consumed by the consumers Capital would not want to narrow down its demographics of focussing on the limited segments. With high amount of competition from all quarters, Capital would also like to differentiate its product from the other brand with the help of strategic brand positioning so that it can increase their competitive advantage. The company should target hotel industries to sell their chocolates, as there are several chocolate coffee consumer who prefer having chocolates for refreshment. This will help the company to enter into the new market and will provide them with new customers for their products.  The company can also provide their customers with gift pack during the month of Easter, which is post valentine period to attract more customers.   

Segmentation strategy for capital should focus on dividing and grouping of the markets into the specific segments of consumers that shares similar attitudes or behaviour in brand choice. The company should also look forward into the psychological segmentation of its consumers preferring premium brand and depth strategy (Makos, 2015). Being a domestic brand the Capital should make the use of depth strategy so that it can utilise the psychological segmentations in providing the consumers with a lower alternative for price.

Positioning:

Capital Chocolate Company should put its efforts in differentiating its brand from its customers. Successful positioning is largely determined through successful communication and awareness of the projected massage. Over the years, the company had never indulged in any kind of advertising activities and had been reliant on the word of mouth strategy for cautious maintenance of customer’s goodwill (McDonald et al., 2016). However, the company positions themselves as one of the quality chocolate brand proposing high promise of quality and fine tasting chocolate but the Capital lacks association with sufficient brand positioning strategy. The company should implement smart chocolate positioning strategy to position themselves among the smart shoppers choice. The company will look forward to market its product in the urban areas mostly among the women consumers. It will also promote its product in the bakery shops where customer generally prefers buying chocolate with cakes. This can be achieved by offering chocolates at more competitive prices in comparison to the other domestic competitors.

Microenvironment Analysis:

A macro environmental analysis for Capital Chocolate is conducted under the Porters Five Forces to specify on the certain aspects of the microenvironment factors of business;

Threat of substitute products:

The threat of substitute products for Capital Chocolate is high since there are large number of other competing firms in the industry that compete with alternative cooking flavours and prices (Meyer, 2016). The study reflects that the chocolate market is considered to be the highly seasonal with impulsive consumers. In order to increase the market demand several manufacturers have adopted the strategy of providing products which is male oriented being dressed up in black tie with flannels. Products such Melton’s premier chocolates were sold for£7.75 containing 500 gram of premier chocolates while other competitors in regional super market sold 500 gram of chocolate costing £6.95. As stated above, Capital chocolate faced the threat of substitute products since several other competitors offered different flavoured chocolate products at relatively lower price.  

Figure 2: Figure stating Macro and Micro-environment

(Source: As Created by author)

Intensity of rivalry among the competitors in the industry:

Although the chocolate and the cocoa industry have partially differentiated its products, there is a high intensity of prevailing competition with the competitors. Under the current case study it is found that there are numerous equally balanced competing industry which has lower fixed cost and high facilities of storage with greater exit barriers (Rothaermel, 2015). The above stated conditions has lead to the creation of price wars, battles for advertisements, new lines of product with higher quality of customers service in the chocolate and cocoa industry. The Capital Chocolate believes in traditional manufacturing and marketing of chocolate products for brand innovation. The business level strategy for the company is focussed on the combination of strategy integration with overall lower cost of production and differentiation. The company faced intense rivalry numerous brand with few brands selling chocolates at£20 per kilo while other brands sold premium chocolates of £30 per kilo, Competitors such as Goodall’s chocolate sold their products at £19.50 to £25.00. Different producers sold different priced chocolate and prices mainly varied due to verity in their packaging.    

Macro environment factors:

The macro environmental factors takes into the considerations the political, social, economical, technological and legal environmental elements creating an impact on the operations of the business.  

Social factors:

The social factors macro environmental factors of the nation have the ability to create significant impact on the demand of the goods and service. This leads the management to manufacture products according to the needs and preference after complying with the demand pattern of the country in which it is operating (Siguaw, & Simpson, 2015). The consumer behaviour under the case study of Bill Wallace has significant impact on the sale of product as the company has witnessed demographic alteration in the demand of the customers. Social occasions such as Christmas and Valentine day have significant impact on the sale of product reflecting that the companies have considered several demographic changes of the customers. 

Technological factors:

Capital Chocolate can attain grater amount of success and competitive advantage in the market by focussing on the technological aspects in respect to their strategic concern. The company can increase its technology in order to revolutionize the scope of markets in terms of wide scale of production (Thompson et al., 2013). As noted above the company can increase its production capacity from 700-1200 kilos to approximately 2000 kilos with an increase in their workforce. This would ultimately help the company in cutting down its cost of production with economies of large scale. Though the company believes in using traditional mode of manufacturing process, adopting the emerging aspects of technologies can lead to the creation of new opportunities to enter into the new markets. This can even act as a threat to the new entrant by surfacing the fact to compensate with the new technology has turned out to be the optimum intrinsic need.

SWOT Analysis:

The SWOT analysis emphasis on the efforts put into by the Capital chocolate ever since the company first started its operations.

Internal Factors

Strength

Weaknesses

Management

Capital Chocolate is an experienced and versatile chocolate producing company

The company has only limited number of customers and with restricted number of retail buyers

Offering

The company offers unique, high quality with rich nutrient chocolate (Westwood, 2016).   

There are large number of competitors in the chocolate market offering similar products

Marketing

Limited but Loyal buyers of premium chocolates

 

No awareness among other sections of consumers in other areas of Scotland market

Research and Development

The company continues to extend its effort in ensuring quality in the product it delivers

The company does little research on the Edinburg and other areas of Scottish consumer market.  

Competitive

Distinctive name and ingredients of chocolate which other chocolate producing company will hardly be able to provide

Other competitors have stronger brand recognition through advertising and sales promotion (Wood, 2013).

 

External Factors

Opportunities

Threat

Substitute Products

The ingredients used by Capital is full of traditional, hand-dipped, natural with ground vanilla and real butter.  

The recipes used by the company are old-fashioned with other chocolate producing companies may come up new flavours to attract consumers

Threat of new entrant

Opportunity lies for the company to enter into the new marketing areas and attract new customers having taste for vanilla and real butter.

There is a large threat of new entrant as they provide chocolate at competitive price and invest heavily in advertising and brand promotion.

Conclusion:

The success of the marketing plan largely depends upon the proper and timely assessment of business strategy. In relation to this, the Chocolate Company relies on the systematic and structuring evaluation framework. From the analysis of the organisation, it is noticed that Bill Wallace is looking forward to expand into the new market however; certain issues can be aroused due to the company’s external business factors.

Reference list:

Bickhoff, N., Hollensen, S., & Opresnik, M. (2014). Step 3: Marketing Implementation—Executing the Marketing Plan. In The Quintessence of Marketing (pp. 111-136). Springer Berlin Heidelberg.

Booth, D. (2016). Strategy Journeys: A Guide to Effective Strategic Planning. Routledge.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Makos, J. (2015). An Overview of the PESTEL Framework. PESTLE Analysis, 18.

McDONALD, M. A. L. C. O. L. M., & Brown, L. (2016). 5 Strategic marketing planning. The marketing book, 86.

Meyer, P. H. (2016). A Parish Guide to the Use of Creative Problem Solving in Marketing Plan Development.

Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.

Siguaw, J. A., & Simpson, P. M. (2015). A marketing plan for marketing instruction: A satirical look at student comments. In Creating and Delivering Value in Marketing (pp. 129-133). Springer International Publishing.

Thompson, A., Peteraf, M., Gamble, J., Strickland III, A. J., & Jain, A. K. (2013). Crafting & Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education.

Westwood, J. (2016). How to write a marketing plan. Kogan Page Publishers

Wood, M. B. (2013). Marketing Plan Handbook. Pearson Higher Ed.

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