Essay: Understanding Buyer Behaviour And The Chocolate Confectionary Industry In Australia.

Discuss about the Burgeoning Chocolate Market In Australia.

Donald B, one of the popular chocolate makers in Australia owns two stores in Melbourne, he wants the brand to grow nationally and also compete in the international waters. He has a vision to make Donald B so popular that it is able to compete with larger rivals who are producing cocoa product, confectionary, crystallised, glazed fruit, drinking chocolates, liquorice, marshmallow, candid nut and candid popcorn. The purpose of the assignment here is to understand the buyer behaviour of the consumers towards chocolates to create chocolates in sync with their taste. Another important element is to understand the micro and macro environment forces which play an important role in the sustainability of the business. Fat consumption, health consciousness, increasing price of sugar and cocoa are the external drivers which might affect the production and consumption of chocolates in Australia (Davies & Kitchen, 2015). The intermediaries in the supply chain like distributers, wholesalers, retailers are of great use as they ensure the optimum delivery of the chocolates to the end consumers. The buyer behaviour of chocolate eating population is influenced by various cultural, social, personal and psychographic factors which affect their purchase decision, big data analytics can be used to better understand their behaviour and accordingly target those consumers.(Li & Mo, 2016).At the end, a macro environmental analysis is conducted on the Australian chocolate industry to understand the effect of political, economic, social, technological, legal and environmental forces on the industry. The detailed analysis can be concluded by saying the numbers are strong for the Australian market and Donald B has to the leverage to exploit the growing potential of the Australian Chocolate confectionary industry.

Every business has to assess the opportunity the market has catering to the particular Industry. Market analysis helps in identifying the competitors in the business, key drivers of growth for the business, the supply chain logistics, the audience and the scope of marketing potential. Analysis of all the points is necessary to understand the profitability and scope of the industry in the market. Environmental analysis is a component of the marketing analysis which helps to identify how different forces play a key role in shaping the market (Cherikoff, 2016)

The chocolate industry which is worth 6 Billion USD grew by 4% in the year 2017 in comparison to 3% in the year 2016. The growth in the industry can be attributed to the growing demand of the consumers for premium quality chocolates. The consumers still view chocolates as an indulgence; the health conscious individuals are choosing to reduce the chocolate intake and moving to the higher cocoa content products to satiate their indulgence in chocolate(Rousseau, 2017).

Macro Environmental Analysis

Mondelez Australia is the market leader which has captured 37% of the market share in chocolate confectionary in the year 2016. The decline in the market share of Mondelez Australia is attributed to the growth of premium chocolate brands in Australia. Major players in the chocolate confectionary are; Nestle, Lindt, Mars, Ferrero & Darrell Lea.  The Australian chocolate market is expected to grow at 7% CAGR, high demand for the confectionary products, good consumption of milk & related products, increase in the number of foreign players drive the Australian chocolate market (Poelmans & Rousseau, 2016). Depending on the type of chocolate, the market is further categorized into;

Downstream demand from super markets and other grocery stores-Super markets and grocery stores are the major distributers of the chocolate confectionary throughout Australia; it can also be seen as a direction function of the consumers demand. Factors such as health consciousness and healthy eating habits are driving relatively slow sales in the industry (Beckett, Fowler & Ziegler, 2017).

World price of cocoa- Besides sugar, cocoa is a major ingredient in making chocolates. The prices of cocoa all over the world are increasing considerably, forcing the companies to increase the price of the chocolate. This entire inflation in the prices of cocoa will push the prices of the chocolates thus adversely affecting the industry (Panza, Ville & Merrett, 2018).

Fat consumption-Australians are moving towards a state of high health awareness and thus are indulging them in low fat products. Chocolates, which have a high fat composition, are therefore falling in popularity among the fat conscious individuals.

World price of sugar-Increase in the prices of sugar will increase the manufacturing or the production cost of the chocolates.  Now the companies have to decide whether to pass down the burden of sugar prices on the end consumers or take the burden on themselves. Either way, rise in sugar price is a very important external driver to the industry (Thompson & Prideaux, 2016).

Health consciousness-Health and nutrition are the strategic goals of the Australian government; hence a lot of talk is growing around the topic of health consciousness and high nutritional value. Chocolate which does not fit in any of the above mentioned criteria is bound to suffer due to growing number of health conscious people (Giacosa & Santoro, 2016).

Despite all the negative impact of chocolates on the health conscious nation, the industry has been showing great resilience and is expected to grow at 4% CAGR throughout 2016-2021. In an earlier report, despite all the challenges faced by the chocolate confectionary industry,the Australians are eating more chocolate bars, blocks & boxed chocolates than they were eating in the year 2013(Bliss, 2017).

Buyer Behaviour of Australian Consumers

Buyer behaviour can be understood as a systematic approach which consumers follow while entering in the purchase process and making buying decisions. Consumer buyer behaviour is the sum total of a consumer’s attitudes, preferences, intentions and decisions regarding the behaviour of consumer in the marketplace which purchasing a product or a service (Pappas, 2016).

Micro environmental forces are a marketing term which implies depiction of the factors or the forces which have the ability to build and maintain successful relationship with the customers. These are forces which are internal to the firm. SWOT analysis is a part of micro-environmental analysis, as strength and weaknesses are internal to the organization. The utility of the analysis lies in leveraging the strength and minimizing the weakness of the organization (Clarke, Friese & Washburn, 2015). This section of the report will focus on the Suppliers and intermediaries, competition and publics which are crucial in understanding the micro environment.

Manufacturers are unable to sell the products directly to the consumers and hence they need suppliers and intermediaries to make the product reach to its customers. Suppliers and intermediaries play an important role in the supply chain management and companies have to make special efforts to maintain the effectiveness and efficiency of its supply chain network (Bonjean & Brun, 2016).

Merchant whole sellers-Also called as whole sellers, the purpose of whole sellers is to buy in bulk from the manufacturers and then resell the same product to other businesses or retailers. Merchant whole sellers differ in their operational strategy, some deal in just one product, while other store more than one products. The different models under which they operate are; Cash & carry outlet, warehouses, mail order business and online sales. Donald B should use whole sellers to spread its chocolates even in the interior of the Australian market (Grunig & Morschett, 2017)

Distributers-These are also called as functional wholesalers and work on a commission mode. They expedite the sale process between the producer and the retailer by supplying them the goods. Distributer model will ensure the retailer shelves are always filled with chocolates of Donald B.

Retailers-Retailers play a very important role in the supply chain ecosystem as consumers directly purchase goods from the retailers. The retailers can be used to ensure that the product is reaching even in the remote locations of Australia, and anyone who is interested in buying Donald B chocolates can have easy access to it.Example being Malls, super markets, hyper market, And Small Grocery Stores.

Micro Environmental Forces in the Chocolate Industry

Companies have to really work on making a strong relationship with the intermediaries as they are the connect between the company and the end consumers. Distributers at times try to push the products on which they are getting higher margin, similarly retailer fill the shelves with the product they are getting a higher commission; this can tarnish the image of the company. Hence, it is always advised to maintain a healthy relationship based on trust with the suppliers.

Publics are communities of people at large which have a direct or indirect association with the organization. Customers, Investors, employees, investors, media and shareholders are part of publics for any company (Armstrong, Kotler, Harker & Brennan, 2015).

Customers- Customers can impact the business both positively and negatively, the positive engagement can be by being a loyal customer of the company and negative can be by spreading negative word of mouth about the company’s product among the peer and on social platforms (Bolman & Deal, 2017).

Investors- Every business has either a private investor, institutional investor or the government is investing in the company, the prerequisite of all the investors is to achieve profit or return on investment. In cases, where the return on investment is negative or not up to the expectation of the investors, they withdraw their support to the company leaving company in jeopardy (Frederickson & Rohr, 2015).

Macro environment can be understood as the forces which are external to the business and can affect the business organization adversely. Macro environmental analysis is an analysis of the Political, economic, social, technological, environmental and legal factors of the country.

Conclusion

Operators over the chocolate confectionary industry has been facing some problems from quite some time, the problems are due to the increasing price of cocoa, sugar and other raw materials used in the preparation of so. More so, the awareness regarding health is increasing steadily in Australia, due to which a number of people are refraining themselves in indulging into the pleasure of eating chocolates. Having said that, the consumption of chocolates in Australia is on an upward trend, with the only difference that people are moving to bitter chocolate with less sugar and more of cocoa. The Australian chocolate market is dominated by Mondelez, Lindt , Cadbury and home brands of wools worth and Coles, every company has its own well defined audience and have positioned themselves according to fit into the spectrum of chocolate eating population. Donald B has two stores in Melbourne, in order to create an image in Australia, the company has to go with low pricing strategy d makes it product a head on competition to the local dairy product, this way the company will be able to earn profits and maintain business sustainability. The macro and micro environment of Australia is extremely conducive in nature for carrying out the business operation, thus the company has a good opportunity to make it mark in the evolving chocolate industry.

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