Competition In Business-to-Consumer And Business-to-Business Markets In Thornton

Describe about competition in business-to-consumer and business-to-business in Thornton?

The report focuses on the market positioning based on the competition in both business-to-consumer and business-to-business markets. The project provides a detailed review and reforming of the strategies of the company’s mission and vision statements so as to ensure the clarity of purpose for the future of Thornton's (Thorntons plc Annual Report and Accounts 2013, 2015).

Apart from this the project deals with the various internal and external factors that have an effect on the company’s marketing strategy. The SWOT analysis of the company is done so as to identify the probable market scenario of the company and to find the weakness of the company and act accordingly.

The various business channels of the company as well as the business partners of the company that is the franchisers and retailers analysis is done to get a clear picture of the company. The company has its own channels of distribution in the market. More over the company has their own stores and franchisee through which they are able to serve the people and meet their expectations. The company has installed a robot packing machine which has increased the efficiency of the packing in the boxed chocolates segment. The company had extended their relationship with their logistic partner DHL, so that the company can be benefitted in that sector.

Thornton is the largest chocolate company in UK. The company is creating quality chocolates for the people for more than 100 years. From its inception the company has now a turnover of £220 million. The company has a large channel of operation which includes franchises, online as well as shops and a number of retail partners. The company tries to provide the people to say important things to their near and dear ones through their chocolates. The company uses creativity, and excellence to bring the people together is the strategy of the company.

The vision of the company is “to be Britain’s best –loved chocolate brand, making every customer smile” (Thorntons PLC Annual Report and Accounts 2014, 2015).

The company has a retail division and a FMCG division. In the retail division the company   has 296 stores as well as cafés across the country as well as Ireland. The company also wishes to be a multi- channel retailer in the country as well as internationally. The company is the leader in their core business and they are followed by Cadbury (Khan, 2015). The company focuses to meet the needs and demands of the customers as well as to deliver a reduced and a sustained estate in retail. The company wishes to grow the sales utilising all its channels.

The market of chocolate has been growing in the recent years with an overall market worth of £3.9 billion. Even though there is a down turn in the economic market the consumption of the chocolates has not declined. The purchase of the chocolates for the purpose of treats as well as gifts is increasing over the years. This is so because the trend of giving chocolates to people as a substitute to high priced gifts are increasing (Thorntons Strategy Presentation, 2014).

The recent and current state of the business

The company is aiming to retain the number one position in the UK market. Thornton puts the shopper at the centre of the business. The company ensures that the products are available at places where the customers want the products. Last year the company was successful in reducing the store estate so that their business is sustainable as well as profitable. The company aims to position its brand consistently in the market so that the customers are well aware of their products (Just-food.com, 2015). The packaging as well as the range of products are innovated and updated so that the people find the concepts new and refreshing. Moreover the company wants that the people to have good shopping experience while they are in the stores.

The international sales of the company have grown over the years to £6.1 million. The company has adopted a distribution strategy through the various super markets in the foreign countries like Australia, UAE, and South Africa. For the time being the company is planning to gain more knowledge on this frame of distribution.

The company has introduced a private label in the year 2012 where the company has earned a profit of £6.3 million. There is as such no competition in this segment for the brands and products that the company supplies.

Though it must be seen that the retails sales of the company declined by 9.3% from £132.1 million to £120.0 million. There is also a decline in the revenue from the stores owned by the company due to the closure of 35 stores (Thorntons Strategy Review Presentation, 2011).

Own Stores- the company has their own merchandised stores through which the company sells to the customers directly. The company made pleasant progress all through the year. on the whole  sales were low 0.8% ( in 2012 it was down 3.8%); but the company witnessed development in like-for-like sales in each of the important occasions in the second part of the financial year (Mother’s Day, Easter, Valentine’s Day,  and Father’s Day) which resulted in a small growth during the second half of the year.

Franchise- the company offers franchisee to those who apply to them for franchising. The company had considered an addition of 20 new franchisee stores to the card and the gift retail market. The company has 186 franchise locations which increased from the last years total of 177 stores. There were 20 new openings and 11 closing of shops.

Thorntons Direct- it is the online division of the company to the customers as well as corporate business. In spite of being a small part of the overall industry, the prospect for the online business of the consumer remains strong and the company is progressing to invest properly.

The company aims to provide creative products to the people keeping in mind the innovation of the chocolates and the packaging. Through this the company aims to excel and also bring the people together. Recently the company has come up with new logo for the company as well as new colour palette. Brand positioning has continued to present various opportunities. The breadth of the products that they offer to the shoppers is becoming clearer as the company is focusing on a new look brand and feel (Bacevich, 2011). The company successfully launched Classics range in both single and double layers through all the channels, and then the launch of “Nostalgia” range of fudge and toffee was made which gave new opportunities for the distribution into the Commercial channel of UK (Lawson, 2013).

Theories and application

Confectionary market- the confectionary market is of considerable size and the revenue of this market was £ 3.9 billion. This sector has a growth of 2 % over the recent years.

Gifting markets- the total gifting market of the company is at £ 39.4 billion, this is ten times more than the confectionery market which also grew at 2% over the recent years (Thorntons- Full Year Results Presentation, 2013).

Political issues- the company as such faces no political threats in the market while operating. Though there may arise, certain issues such as the use of wines and rums in the making of the chocolates. The Growth in sales participation in Commercial channel and consequence of VAT rate increases will go on to influence the margins (Larrea, 2015).

Economical issues- during the times of economic downturn, there is chance that the people’s preference may shift from high priced chocolates to low priced ones. The economic climate can also lead to a failure of the commercial business or the franchisee business of the company

Sociological issues- the company’s products are also driven by the seasonal needs of the people like during Christmas, Easter, Valentine’s Day etc. There was a excellent growth of the company during this time as there was a remodelling of the products and the merchandising.

Technological issues- the company continuously upgrades their technologies so as to improve their services. The people of the company are trained to use the various new technologies so that they keep up to the expectations of the company. The company has several electronic points of sales (EPOS) so that they are able to serve the people better. The company has invested in the manufacturing processes so that they are able to increase the capacity of their boxed chocolates.

Environmental issues- there have been a rise of the cocoa due to the seasonal changes which has affected the cost of the production of chocolates. The company has tried to optimise the use of the ingredients, as well as reengineering of the products (PESTEL Analysis of macro environment, 2015).

Legal issues- the problem of contamination of the food, accidents and malicious activities is a major issue for the industry. The company sees that there are no such issues and there are security systems which will guard against the contamination of the ingredients and the products.

Strengths

Weakness

• Though the market is growing but there is a lack of generation of profit in some of the sectors. Though it must be seen that the retails sales of the company declined by 9.3% from £132.1 million to £120.0 million.
  
  
• There is also a decline in the revenue from the stores owned by the company due to the closure of 35 stores.
  
  
• More over there is threat from the expansion in the markets which are unknown as they are not sure whether they will be accepted. Moreover it is not possible to relocate the manufacturing plants to the other places of Europe, thus it often leads to the cost of transportation.
  
  
• The shorter shelf life of the products is one of the main problems that the company faces. Moreover the new innovations and the introduction of newer product are making the life of the products short. Moreover the logistic and the warehousing of the goods adds to the cost of the products (SWOT analysis and PEST analysis, 2015).
  
  
• The company is dealing with gift items and seasonal sales which makes the increases the demand of the products during those time but otherwise the demands are not up to the mark.

Opportunities

• The main opportunity that the company should grab is that the chocolate industry is the fastest growing industry as the demands of chocolates does not decline, rather they mostly increase.
  
  
• Due to the increasing demands off the chocolates in the market the sales of the company increases if they are able to keep up with the demands of the products (TheGuardian, 2011).
  
  
• Moreover the European market has the highest number of chocolates in the world with Switzerland consuming the highest and in Britain the consumption is 660,900 tonnes per year. Thus the company should invest in the European market apart from diversifying to the rest of the world.

Threats

• The major threat is that the industry has no barrier for new entries, thus there are chances that new companies can enter the market and capture the market.
  
  
• There is very much competition in the market. The market of confectionery has several strong players in the UK. Each of the company has their own speciality and they also try to grab the attention of the people (TheGuardian, 2011).
  
  
• There is a threat that the taste and the preference of the people might change, thus the company will find it hard to sell the products.
  
  
• The prices of the raw materials may increase leading to the rise in the cost of the products.
  
  
• The increase of the FMCG industry results in a bigger reliance on a number of small key customers. The loss of part or all of a main grocery retail purchaser could adversely affect the profitability of the company.

The company is the leading and a premiere chocolate brand in the UK, with the shoppers of the company’s chocolates exceeding £ 300 million. The company aims to become the leading brand in chocolates in the commercial market of UK. The company can do so by developing in 5 of their key areas (Thorntons Strategy Review Presentation, 2011).

In the Inlaid Boxed Chocolates, the company has a market share of 35%. With the increase in the market of the chocolate industry the company has the opportunity of increasing the market share of the boxed chocolates. The company can grow their business overseas in terms of the seasonal products in the various markets. The company has a current market share of £1 million in both USA and Australia. Thornton’s are aiming to increasing the market share to £8 million in the USA and £3 million in Australia.

Brand positioning

Moreover the company should not keep the seasonal products in stock as these can hamper the sales if the offers and the products are not optimised as it happened once in the past. The sales of the Mother’s Day and Valentine’s Day dropped due to that reason (Thorntons- Full Year Results Presentation, 2013).

The company has installed a robot packing machine which has increased the efficiency of the packing in the boxed chocolates segment. The company had extended their relationship with their logistic partner DHL, so that the company can be benefitted in that sector. The company is expecting that the warehousing as well as the distribution of the company will improve and the capacity and the productivity will be developed.

Over the past years the company have delivered the one of the largest investment in their people, in stores, in factory and as well as in their management teams. The company is recruiting people who have FMCG skills and experience and can invest in systems so that they can help the company to achieve their goals.

Recently the company has come up with new logo for the company as well as new colour palette. Brand positioning has continued to present various opportunities. The breadth of the products that they offer to the shoppers is becoming clearer as the company is focusing on a new look brand and feel. The company have been functioning hard to develop their positioning of the brands and visual identity; they also enhanced their product variety packaging and categorisation and delivering exceptional merchandising to all their channels. They are in the course of providing a step-change to the come across and get a feel of their brand. Moreover the company is able to display this by the new branding on their newest covering, grocery merchandising refurbished stores and marketing communications

The company has its own channels of distribution in the market. More over the company has their own stores and franchisee through which they are able to serve the people and meet their expectations (Marketing91.com, 2014). The company is the market leader in terms of excellence, creativity and it is considered as the top most priority while gifting. Moreover the market share of the company is growing over the years. Thornton’s provide a high quality of products which uses better quality ingredients and they have a consistency in the content of the cocoa.

The company has a strong brand name and it is due to the fact that they use innovation at a regular interval to keep up to the expectations of the people’s changing demands. Moreover the company provides attractive packages and designs for their products which the people like (MCCARTHY, 2015). The company has decided that they will be selling the products at places where it will be convenient for the people to have access to the products. There are franchised stores as well as the own stores of the company which are located at convenient locations. The company has competitive advantage over the other players in the market as they are far more into researches and developing of new products. Te multi channel of the company are one of the main strengths of the company as the company is able to mitigate the risk from the down turn of particular channel.

Markets of the company

Conclusion

The company needs to change their strategies keeping in mind the availability of the products. In liaison with the strategy of the company, the company needs to change their business model so as to reflect the constantly evolving character of shopper’s activities which are reflected in the multi-channel environment of retail (Thorntons- Katapult, 2015).. The company needs to position their products at places so that they are available whenever, wherever and however our customers demand. At the same time the company should retain their supply chain so as to continue the efficiency of their production and supply chain operations. The company aims to provide an excellent customer experience, from wherever the people wish to buy Thornton’s products. Thornton’s’ multi-channel business model, which have 175 franchises, 260 stores, a presence on the online and a  business selling commercially to the major convenience stores, retailers, grocers, and independent retailers, mostly in the UK but with a rising international supply, the company is able to serve the needs and demands of the customers. There is a worry that the company may fail to differentiate it in the premium category next to names such as Hotel Chocolat and Green Blacks (Thorntons- Katapult, 2015). The company still charges a higher price than mass marketers Cadbury's or Mars. In conclusion, it is obvious that Thorntons is facing fairly tough time in the chocolate industry. If they feel like increasing to the other untapped markets, they have to initially work strategically on their margins of net profit. It is seen that their net profit margins were low in some of the years thus hindering the success. Thus the company must see that the company meets the demands of the people by providing attractive and innovative products and packages. The company must also reduce their supply chain cost as well so that it does not add to the cost of the products.

References

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Khan, Z. (2015). FAST FOOD & SNACKS INDUSTRY GUIDE (1st ed.). British Library. Retrieved from https://www.bl.uk/bipc/pdfs/Fast_Food_and_Snacks_Industry_Guide.pdf

Larrea, C. (2015). Market Research for Sustainable Investment (1st ed.). Retrieved from https://www.fastinternational.org/files/Market%20Research%20for%20Sustainable%20Investment%20-%20Cocoa%20LA.pdf

Lawson, A. (2013). Analysis: How Jonathan Hart has put Thorntons on track for growth. Retail-week.com. Retrieved 18 March 2015, from https://www.retail-week.com/sectors/food/analysis-how-jonathan-hart-has-put-thorntons-on-track-for-growth/5050244.article

Marketing91.com,. (2014). SWOT analysis of Cadbury. Retrieved 18 March 2015, from https://www.marketing91.com/swot-analysis-of-cadbury/

MCCARTHY, J. (2015). Thorntons returning to sweeter times - brand and marketing director Hannah Legg discusses plans for the retailer. Retrieved from https://www.thedrum.com/news/2013/09/17/thorntons-returning-sweeter-times-brand-and-marketing-director-hannah-legg-discusses

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