You will be writing a report for Donald’s company. For this assessment, your report should contain the following elements:
1. Discuss the buyer behaviour in relation to chocolate products
2. Analyse the microenvironment (the relevant publics, the suppliers and the marketing MKT600_Assessment 1_Case Study Report Page 3 of 6 intermediaries).
3. Summarise the likely competitors, what they offer and who they seem to target 4. Analyse the macro environment. What are the society-wide influences on chocolate products? Are there demographic, economic, natural, technological, political, or cultural trends that have, or will, affect fast food consumption?
Figure 1: Chocolate Consumption
(Source: www.roymorgan.com 2019)
In the market of Australia chocolate consumption is increasing rapidly among the public. More Australians are buying chocolate products and consumption is among the highest in recent times. It has been seen that the buying trends of the consumers are more towards chocolate bars. The consumption rates have been increasing since the year 2013. It is important to understand that the market for chocolate is growing in Australia as well as worldwide. The most popular chocolate bars are those that are manufactured by Cadbury. Consumers in the currently existing marketing scenario are preferring the 50g bars that are being manufactured by Cadbury (More Aussies chomping on chocolate 2019). The consumption of chocolates is increasing at a fast rate. Dairy milk products of Cadbury and other flavors like Hazelnut. Cherry ripe or fruit and nut are among the most popular flavors of chocolates that are being liked by the people. However, it is not only Cadbury that has been performing well in the market. There is significant presence of other companies in the market that are being liked by the consumers. It is important to note that chocolate bars are not just being liked by children or the youngsters but a large portion of middle aged or old consumers are also consuming more chocolate that they had done in the recent past.
It was found that in 2016, more than 68% of the population of the country was consuming some form of chocolate products in 4 weeks average time. This was a significant rise from 65.3% as recoded in 2013 (Chocolate consumption Australia 2019). Estimates show that over 13.5 million people consumed chocolate products. They were aged over 14 years. It was also found that boxed chocolate products were the most sought after chocolate products in the country. The consumption of chocolate is found to be mostly based on sharing. Hence, bigger portions of the products are popular among the buyers. It can be said that in accordance with the emerging trends in chocolate consumption there is scope for significant growth of the organizations present in the industry. There is also a marked growth in the premium product buying habit of the public. More people are buying premium products like Ferrero Rocher. It can be said that the public consumption of the chocolates are improving and evolving at the same time. In a city like Melbourne, which is one of the most important centers of the country consumption of chocolates are the same as in the rest of the country. It is important that the newer brands start to enhance their product offerings. The Australian chocolate market is valued at 2.9 billion dollars as of 2017. It is predicted to grow and surpass the mark of 4.3 billion dollars by the year 2023. People are spending more towards buying products that are innovative. Hence, consumers are buying products that are new and improved. The products that are mostly consumed by the people can be divided into Dark chocolate, Milk chocolate and White chocolate. It is important to consider that chocolate is consumed by the young and old alike in the country. Hence, customer segmentation becomes an important choice for the companies.
The relevant publics are the consumers, the employees, the suppliers, distributors and the sellers. The consumers can be divided primarily into three groups. These groups are children, young adults and middle-aged or older consumers. Milk chocolate is more popular among the children (Thaichon et al. 2018). Dark chocolate is preferred by both the youngsters and the middle-aged groups. The suppliers are important as the quality of production depends on how the raw material is sourced. The employees are important publics as they will determine the success of the organization. Modern chocolate product making requires both human skill and technological operations. Hence, employees need to be hired on the basis of essential skills or given proper training. The distributors are important as Australia is a large country and transport of manufactured goods can determine profitability. The partner organizations are mainly dairy oriented companies. The companies produce items that can help in the production of chocolates. The sellers are important as the channels through which the products are sold determine how much essential target markets are served.
Suppliers are very important factors for any chocolate business that runs in the country or the world. This is mainly because cocoa is mostly produced in African and South American countries. The cocoa sourced from outside have to then be used for the production of chocolate. This makes the procurement of resources difficult than usual as supplies have to be greatly imported. The suppliers of other required aspects such as sugar, dairy and other ingredients are however more freely available in the country. However, there are efforts from the industry and the government to grow cocoa in the country. This could mean that the supplies of the same could increase. Still strong international suppliers are required to source cocoa. As of now the suppliers are mostly working for the larger established companies of chocolate in the country. Suppliers such as Daintree Estates can provide home grown cocoa supplies. Other suppliers have to rely on cocoa brought in from Western Africa. Donald B needs to consider them both concerning the expenses and quality connected with the same.
The marketing channels that can be used by Donald B are supermarkets or direct sales counters. This means that the intermediaries need to be predominantly wholesalers, retailers and agents. It is important that multi-channel marketing is used by the company. This will significantly improve the customer reach for the company. The intermediaries can be chosen with regards to the localities first. For example- the retail stores in suburban Melbourne can be used. Moving forward intermediaries such as the supermarkets like Coles or Woolworths can be used to market the products. Large retail chains are important intermediaries to be considered. This is because the distribution across the country can be effectively facilitated by the larger retail stores as they are located across the country. Since a large number of confectionary products will be made by the company, it is important that the cocoa products or chocolate candies be sold through the large retail chains. Other products can be sold through smaller retail shops.
The largest competitor in the country will be Cadbury. The company accounts for the great majority of the chocolate products that are manufactured in the country. More significant regional competitors of Donald B will be Darrell Lea, Aldi stores Supermarkets and Haigh’s chocolate. The three companies are important competitors concerning the regional market. The three companies normally sell their products through their respective stores located at various markets and stores across the various cities (Gallo, Antolin-Lopez and Montiel 2018). They also have significant presence in Melbourne and can be immediate rival companies for Donald B’s confectionary company.
Figure 2: Chocolate industry
(Source- foodnavigator-asia.com 2019)
Concerning the country wide market, the significant competitors are Cadbury, Mars and Darrell Lea. Cadbury products are the largest sold products in the market of the country. The company targets consumers of all age groups. Dairy milk products of Cadbury and other flavors like Hazelnut are very popular among kids and teenagers (Cadbury Australia 2019). Cherry ripe or fruit and nut are among the most popular flavors of chocolates that are being liked by other young adults or middle aged consumers. Mars tries to predominantly attract the young adults and the youth with their products. Hence, Mars bars also focus on creating bars that are chocolate infused energy bars. Recently the company is also selling products like king size, dark and light and triple chocolate. Companies such as Darrell Lea tries to attract youngsters with their products. This is evident from the company’s products such as the chocolate boxes for young couples. They also manufacture products for the growing number of health conscious consumers like sugar free products. An important part of marketing for Darell Lea is the fundraising items that are marketed in Easter or Christmas. Other companies like Haigh’s chocolate focus on selling chocolate products as gift items for special occasions. Through this the company focuses on reaching the younger and middle aged customers in the Australian market.
It can be seen that a large number of companies in the country are focusing on manufacturing products that are healthier than before. This points to the fact that a large number of calorie conscious and health focused consumers are present in the country. There is a new trend of targeting health conscious consumers in the country. Companies are lowering their sugar content and are even manufacturing sugar free products. The most important factor that can affect the competition in the market is that the most important identified competitor firms have garnered more expertise in the field of chocolate making and sales. The companies already have large consumer bases.
The major external factors affecting the organizations have been discussed below.
It is estimated that there are 13.5 million chocolate product consumers in the country aged over 14. This proves that a large number of people apart from the children are consuming chocolate products in the country. The number comprises of more than 68% of the Australian population. The demographic information of the country reveals that 17.8% of the populations of the country was between the age groups of 0 to 14 years. 12.62% of people of the country are between the age group of 15 and 24 years (Abs.gov.au 2019). This reveals that a significant part of the population of the country is formed by children and young adults. This has led to the growth of fast food consumptions as these age groups are the predominant group that consume fast foods. The same also holds true for the chocolate industry.
The economy of the county is experiencing a lower than expected growth at the time. However, the country’s economy is the third largest in the world. The country has great produce that contribute significantly towards the growth of the fast food industry. The company recovered slightly with a 3% growth rate in 2018. The fast food industry in the country is growing and the annual growth expectancy is 2.7% for the next five years (Phillipov 2016). In the period 2018-19 however, the demand is forecasted to slightly decrease by 0.1% due to more emphasis on restaurants by customers. The prospects for chocolate products are more with the industry expected to grow to become 4.3 billion dollars industry by the year 2023 (Chocolate consumption Australia 2019).
Cocoa does not naturally grow very much in Australia. However, there is the constant funding of the government towards facilitating the growth of cultivation of cocoa. Thus, the natural factors are being enhanced to improve the prospects for the natural production of cocoa (Davies and Kitchen 2015). The fast food industry is also being affected by similar kind of activities. More and more non-traditional crop farming is being undertaken across Australia. This has the potential to improve the prospects of fast food further in the country. It is important to note that the country is naturally diverse and there are facilities to cultivate a large number of crops. There is however the significant threat of ecological issues that may arise due to it.
Technologically the country is advanced. The growth of technology has hastened the production of fast food items. If chocolate production is considered some of the best technology is present in the country for the effective growth of the fast food production. There are now very efficient procurement, processing technologies in the country that are being used to produce fast foods at a significant pace. This is causing the consumers to get hold of fast foods easier than before. Ready to eat fast food is increasing in demand. In the future this is bound to grow further resulting in positives for the industry.
Fast food consumption increases health hazards for the public. Hence, the government is focused towards promoting healthier food among people. The chocolate industry however can benefit from the subsidy that the government is providing for the domestic cultivation of cocoa. The government is also proposing fat tax to ensure the food standards and safety for the consumers of the country. The focus is hence towards providing and promoting healthier substitute products. This can mean that the fast food producers start paying more attention towards selling healthier fast foods. The government decisions to regulate fast foods can affect the consumptions patterns of the public.
The cultural factor that can affect the prospects of the fast food market of the country is the increasing focus being provided to healthier foods. Concerning the chocolate industry companies are producing healthier versions of their products. There is a rising health conscious youth population in the country. This means that many young people are preferring healthier substitutes of fast foods. However, chocolate product consumption has increased and is forecasted to increase more. The low-calorie variety of fast food is gaining importance in the country. There is a rising number of foreign students in the country that prefer fast food as easy means to get their daily food requirements.
The implications of the study suggest that Donald B has significant growth opportunities for his chocolate company in the country. However, there are significant challenges that the organization may have to face in the process. As understood Cadbury, Mars and Darrel Lea are significant competitors of the organization. It is important that the company focuses on marketing activities systematically to improve the effectiveness of their expansion. The major challenge is to face the competition from the established businesses and to tackle the major forces affecting the market. The growing number of chocolate consumers and the favorable market for fast foods in the country can be crucial towards leading the company towards success. It is important that the organization takes marketing measures that ensures a stable customer base over which they can improve with time.
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