Chocolate Industry Analysis

“Marketing is the process by which customer needs are anticipated and identified. Ways are found of meeting those needs at a price that consumers are prepared to pay and which allows the business to make a profit”

For launching a new product we use PESTLE or SWOT strategies and let us Consider that we are launching a new chocolate product .

Factors that should be consider while launching a new product i.e

Political, Economic, Sociological, Technological, Legal and Environmental and the questions we should take under Consideration

What are the key political factors likely to affect the chocolate industry?

What are the important economic factors of chocolate industry?

What are the cultural aspect of chocolate industry?

What are the technological innovations ?

What current and impending legislation may affect the industry?

What are the environmental considerations?

Situational Analysis of chocolate industry and market tactics

To launch a new chocolate product we must analyze the role of the marketing function in a business, we are going to follow through what might have happened in the marketing of a major new chocolate bar and the major economical , political and technological factors that affects the chocolate industries.

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1. Assessing the market

The market for chocolate bars is highly competitive. There are a small number of large firms in the industry – Mars, Cadbury, Nestlé and Suchard being the most well known. Many of the brands in the market have been in existence for a long time and have a high amount of brand loyalty. Openings for new products therefore, are limited. There are many examples of products that have been launched and have been withdrawn because they could not sustain long-term sales success. Can you remember the Prize Bar, Aztec and Junglies?

The market for certain types of chocolate bar has changed in recent years. The growth of the so – called ‘count-line bar’ (shaped like Mars bars) became popular as people ate chocolate on the go as opposed to sitting down in a room with a traditional bar of chocolate. Companies had to respond to these changes. Row tree (now owned by Nestlé) changed the shape of their Aero bar and Cadbury brought out a rival bar called Wispa. Both of these were designed to exploit this growing market.

The market is still changing but using chocolate as a snack as opposed to sharing a bar amongst a family. Giving a chocolate bar as a gift is still a growing part of that market.

The UK chocolate market is the biggest in all European market. People in the United Kingdom consume more chocolate than any other Country in Europe.

“Mintel said the UK consumed 3.5 billion pounds ($5.6 billion) worth of chocolate in 2008, more than any other European country, with only Germany, which has more than 20 million more people, coming close at 3.4 billion pounds”

Some of the famous brands are

Mars (http://www.mars.com/)

Cadbury Schweppes (http://www.cadburyschweppes.com/EN/Brands/)

Nestlé (http://www.nestle.co.uk/)

Suchard (http://www.kraftafh.co.uk/Cultures/en-GB/Brands/Suchard/)

Amul Chocolate

Boost

Club Mint

In December 2009,the market research company, showed Cadbury’s chunk of the chocolate market by value slipped 1.7 per cent to 29.8 per cent last month, the first time that it has fallen below 30 per cent all year. Market share of Mars, its biggest rival, slipped 0.6 per cent in the period.

Kraft, which makes Milka and Toblerone, increased its market share by 0.7 per cent to 5 per cent, while Nestlé raised its share 1.2 per cent to 20.4 per cent of the market..

The market research firm estimated the British chocolate market would be worth 4.4 billion pounds by 2013

2. Identifying a gap in the market

Once the market has been analyzed, it might become clear that there is a gap in the market. What this means is that, there is an identifiable customer need that is not currently being met by an existing product. It could also be where a rival might have a presence and where the company concerned believes it could offer a competitive alternative.

Market research, which in many cases is on-going, will have given the business some idea of the nature of the market and the extent of the possible market. It may be that further research is used to target particular market segments that the business feels will be the ones most likely to purchase this product and what it is they want out of the product. Much of this will be used to inform the marketing mix.

3. Developing the product

Quite often businesses in this particular industry want to develop a ‘brand personality’. What this means is that they will want consumers to associate something specific with the product. KitKat for example, is associated with a ‘break’, making it the perfect accompaniment to a cup of tea or coffee. The personality of the product will be in line with the market research and analysis carried out. The ingredients, the look of the product, its texture when eaten, its name and packaging, and how it will be promoted will all be key factors that will be informed by the development of the brand personality.

A very good example of this process is the development of Yorkie. Yorkie was developed as a contribution to the count-line bar market. It aimed to use the concept of a chunky chocolate bar but in a different format to allow it to be eaten on the go. The key thing to emphasise was the chunky nature of the chocolate,and to do that Rowntree developed its early marketing around the length of time it would last and it being an ideal accompaniment for long journeys. The trucker image stuck and gave the bar a ‘masculine’ personality. In recent years, this has been exploited with a deliberate campaign suggesting that it is so chunky it is ‘not for girls for!

4. Product testing

Once these stages are gone through, the product is likely to have to be tested. People may be given choices of different names or different packaging prototypes to see what consumer reaction are.

It may be that this type of problem has been resolved at an earlier stage, in which case more substantial user testing may be used by virtue of a test-market. This may be a selected region of the country where there is a profile of users that is representative of the country as a whole. Using test markets gives relatively accurate feedback but is also much cheaper than a national launch, which might not see the product doing as well as anticipated.

Remember that to feed a market, the capital investment has to be there to back it up. If the test market showed that the product was going to be very popular, the business would have to ensure that sufficient capacity was available prior to a national launch. You would certainly not want to have a product launched and people not be able to get hold of it!

Image: User testing is an important aspect of marketing strategy – it gives a good idea of the likely market reaction without incurring the costs of a national launch.

Media and marketing implementation

Most often than not but, It is very difficult to convince a customer to buy a certain product if they do not understand the product. We need to make a strategy for marketing new product in the market so that we can achieve our target. Without a bullet proof plan to attract customers, your efforts will most likely be inefficient. we should ensure that Businesses should focus what a customer needs and what he is looking in the product .so that we can make a long term profitable customer relationship . This means that you need a plane to know customer more closely in a flexible way so that whenever need we can change our product according to our customer’s perceptions and demand.” On the other hand, your marketing scheme should be focused on identifying and communicating the benefits of your business is offering to its target market”. You will then need to monitor and maintain its effectiveness.

Advertising new products

Market part is an essential factor for a successful marketing strategy and if we are able to recognized the different market areas that allows a business to make fruitful and more efficient decisions in regard to advertising new quality products. This is the lock pick to understanding the different kind of needs of different types of customers. Once you have divide your market in different categorizes, you will then be able to formulate marketing activities that will ensure your targeted audience to know about the products or services you are offering and why they need them in their lives. We can achieved this through the various kind of advertising, since customer known’s what they want exactly want and motivate them,. You must have to hit your targeted audience to feel like that they must need to purchase whatever it is you are offering is the best product in the market. So that they buy our product and increase our sales

How to launch new product and their strategies

Gigantic changes are going on in the world and marketing strategies are no exemptions to that. Businesses should think outside the box. Observe who is doing better and try to imitate them or better yet, outwit them. It will greatly benefit your company to do market research in order to determine your potential market and make changes to your current marketing strategy. This is mainly done to draw uninterested customers to at least give your business a try. Your new product launch should make enough noise to ensure that it will remain in customer’s memories and entice them to really try it. With the various media available today, you can maximize your visibility by not limiting your business to one media. You can turn your company around by doing a major brand makeover. If there are not a lot of people who are buying your product or service, then perhaps it’s because they literally do not see you. This is not a time when businesses are allowed to sober down on marketing techniques, just because the economy is going down. Once the economy gets back on track chances are, people will no longer remember those that were not visible in the market during this time. You have to make your business a household name so people will remember you long after this global recession is over.

We can use Marketing mix (4p’s)strategy to launch our final product

Marketing Mix (4p’s ) Introduction

The marketing mix principles are controllable variables which have to be carefully managed and must meet the need of the defined target group. All elements of the mix are linked and must support each other

Marketing Mix

Price

Products

Promotion

Place

Target

Market

Pricing mix Strategy

It is one of the most important part of the marketing mix strategies. Pricing is a mix which generates a revenue for an organization. The remaining 3p’s strategies are the “output” for the organization . We know that it costs to produce and design a product, promote a product and also to distribute it. Pricing is very difficult and must reflect” supply, demand relationship”. Pricing a product too high or too low, could mean loss of sales for the organization. The following factors should be taken into account:

Objectives of the Company

Fixed and variable costs of the product

Target the group and their willingness to pay

Competition with leading organization

Proposed Positioning strategies

“An organization can adopt different types of pricing strategies. The pricing strategies are based on what g the goal the organization has set itself to archive

Penetration Pricing

We can set a low price to our product to increase the market shares and sales of the products is called penetrating pricing

Skimming Pricing

When the company sets higher price of the product initally and then drop down the price to make the product available in the wider…………..The objectives is to skim profits of market layer bye layer,this strategy is popular within the games console industry

Competition Pricing . setting a price in comparison with competitions . a firm has three options, pricing lower, pricing the same or pricing the higher

Product line pricing

Pricing different products within the same product range at different price points. An example would be DVD recorders with different features and different prices.The greater the features and the benefits obtained the greater the consumer will pay. The form of pricing discrimination assists the company in maximizing turnover and profits

Bundle Pricing

The organization bundles a group of products at a reduced price , this pricing strategy is popular with supermarkets

Psychological pricing

The seller will consider the psychology of price and the positioning of price within the market place. The seller will therefore charge 99p instead of 1 pound or 199 $ instead of 200$

Premium pricing

The price set is high to reflect the exclusiveness of the product . An example of product using this strategy would be Harrods , first class airline services. Porsche etc

Optional pricing

The organization sells optional extras along with the product to maxmise within the car sidustry

Product strategy

The marketing mix consist of product, pricing, place and promotion strategies that a firm uses to help them reach their objectives

The marketing min principels are controllable variable which have to be carefully managed and must meet the needs of the defined target group. All elements of the mix are linked and must support each other.

When an organization introduces a product into a market,they must ask themselves a number of questions:

Who is the product aimed at ?

What benefit will they expect?

How do they plan to position the product within the market?

What differential advantage will the product offer over their competitors?

Philip Kotle suggested that a product should be viewed in three levels

Level 1:Core product . what is the core benefit your product offers?. Customers who purchase a camera are buying more than just a camera they are purchasing memories.

Level 2: Actual production: all cameras capture memories . the aim is to ensure that your potential customers purchase your one. The strategy at this level involves organizations branching , adding features and benefits to ensure that their product offers a differential advantage from their competitors

Level 3 : Argument product: What additional non-tangible benefits can you offers?

Competition at the level is based around after sales service, warranties, delivery . A retail departmental store that offers a free five year gurrantee on purchase of their television sets gives their customers the additional benefits of “peace of mind ” over five years should the purchase develop a fault.

Total production concept

Argument production

Total production

core production

Product strategy

Product decision

Branding

Quality

Features

Benefits offered

Product Decisions

When placing a product within a market many factors and decision have to be taken into consideration. These include:

Product- Will the designe be the selling point for the organization .

Product quality: Quality has to consistent with other elements of the marketing mix .A high quality product maybe reflected in the price

Branding: in principles of marketing , By Philip Kotler and gary Armstrong a brand is defined as ‘ a name .term, sign symbol or a combination of these , that identifies the market or seller of the product,

A brand must stand out and be recognizable, and should help the firm differentitate itself from its competitors

Product features: Additional features should increae the benefit offered to you r target market. The firm may decide to change more for these additional features.

Place Strategy

The marketing mix principles are controllable variables which have to be carefully managed and must meet the needs of the defined target group. All elements of the mix are linked and must support eachother.

Strategies of distribution ?

Two types of distribution strategies are available.

Indirect distribution involves distributing your product by using of an intermediary for example a manufacturing selling to a wholesaler and then on to the retailer.

Direct distribution involves distributing direct from a manufacturing to the consumer. For example we can use direct selling like dell computers. To sell the product directly to its target customers will provide us more benefits. The advantage of direct distribution is that it gives a manufacturing complete control over their product.

Place strategies

Manufacturer

Consumer

Manufacturer

Retailer

Consumer

Direct Distribution Indirect Distribution

Depending on the type of product being distributed there are three common distribution strategies available

Intensive distribution: Used commonly to distribute low priced or impulse purchase products For example Chocolates, soft drinks.

Exclusive Distribution: involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much details in its sell.

Promotion strategy

A successful product or service means nothing unless the benefit of such a product or service can be communicated clearly to target market

An organization promotional mix can consist of:

Advertising

Sales promotion

Public relations

Direct Mail

Personal selling

Internet promotion

Public relations: This involves developing positive relationship with the organization media public . The art of good public relation in not only to obtain favorable publicity within the media , but it is also involves being able to handle successfully negative attention

Sales promotion : Commonly used to obtain an increase in sles short terms. Could involve using money off coupons or special offers, loyality cards, coupons , Price promotions for example BOGOF, point of sales ,Packaging promotion or web coupons

Personal Selling: One to one selling is called personal selling. This can either be done face to face or we can use other media of direct selling like phone or internet

Direct Mail: is the sending of publicity material to a named person within an organization. The aim of direct marketing is to creat one to one relationship with the organization target market. Direct marketing can come in the form of post, email, telephone calls and mail order. The company usually contracts a named person at the address.

Internet Marketing : The use of the world wide web(www) for the promotion of product or services. This could be the firm advertising via the use of banner ads, flash videos, or google kewords.

5. After all the analysis we can launch our chocolate bar.

The significant amount of money is required to develop a new product and this money can be larger to develop new product, and the hope is that once we launched the product, the product will begin to start to get back some of that investment.

At the first stage, the product will need further expenditure to support it and make sure that customers know about it. For chocolate bars, the secret is to get people trying it, but to follow that up by buying it again and again and again for many years. In other words, repeat purchases are essential in a fast-moving consumer goods market.

During this early stage, managing the cash flow of the product will be important. This will mean balancing the returns of the product from sales with the on-going costs of production and marketing. If these get out of balance, the future of the product will be called into question and it may be worthwhile pulling the product before any further costs are incurred and ‘cutting your losses’.

To manage the launch and development of a product, therefore, marketing tactics will really come to the fore. It will be important to keep a close link with consumers to find out what they think and also to keep the brand in their horizon amongst the competition. Sometimes this might be something simple like getting your product displayed prominently in shops so that impulse buyers select your product or customers are drawn to your product at the expense of rivals. This in turn will mean having sales people with good relationships with retailers.

Finally, maintaining cash flows in the short term will also be determined by the success of the advertising and promotional campaigns that are developed. Does the firm go for traditional TV ads along with ads in magazines and billboards or does it go for more guerrilla marketing techniques to raise awareness? Should it have an online presence – many branded products have Web sites of their own, for example?

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article6959667.ece

http://www.coursework.info/University/Business_and_Administrative_studies/Marketing/PESTLE_ANALYSIS_and_5_FORCES_ANALYSIS_-_L95526.html

http://www.brand-new-advertising.com/

http://www.bized.co.uk/educators/16-19/business/marketing/lesson/tactics1.htm

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