Haigh’s Chocolates - The Oldest And Most Premium Chocolate Brand In Australia

About Haigh’s Chocolates

Questions:

1.Provide a brief company and Industry Sector Overview.

2.Research and Critically analyse the current STP approach.

3.Develop and Justify a STP approach for the Indonesian Market.

Founded in Adelaide in 1915, Haigh’s Chocolates by Alfred E. Haigh, is one the oldest establishment in Australia in the Chocolate industry. The company was then popular for their fruit centered chocolates which are prepared even today (Haighschocolates.com.au, n.d.). It is the oldest family-owned chocolate maker in Australia and is currently run by the fourth generation of the Haigh family. The company currently has an employee strength of 500 and has 15 retail stores in Adelaide, Melbourne and Sydney. Cocoa beans at Haigh are sourced from all over the globe and they are known for their “Bean to Bars” (Haighschocolates.com.au, n.d.). With over 250 variety of chocolates, the company even today has a handmade segment. Quality and premium standards are the core factors that drive Haigh and they strongly believe in delivering world class chocolate experience every time.

Chocolate and confectionary industry in Australia is one of the leading segments in the food industry with over 7 billion revenue a year. The major shareholders are international brands such as Mars and Nestle while the local suppliers do share a decent percentage of the share. The industry has seen a steady decrease in past five years, due to the increasing concerns of obesity given the fat percentage in the chocolates. This has led to several vendors diversifying into healthier low fat products. However, the dip is not significant yet, given that chocolates have been festive treats for a long time now (Evans, 2015). The number of new competitors in the industry are significantly low, given the giants in the market and also the high capital investment required. The companies that has been in the market for some time are currently trying to either diverge into healthier products or are in search of international expansion.

Australia is known for their chocolate consumption and on an average every Australian consume about 6.7 Kilos of chocolate making 77% of confectionary sales. There are several chocolate brands in Australia that focus on a different target market depending on the cost and variety of chocolates provided. Segmentation, Targeting and Positioning are very important concepts which every organization needs to focus on during the implementation of marketing strategies while launching any product or services. These 3 process along with the marketing mix namely Product, Place, Price and Promotion constitutes the major pre-launching analysis. The below is an analysis of the segmentation, target and positioning of the Haigh Chocolates.

Segmentation

Segmentation is the process by which customers are divided into subsets based on needs and wants (Pyo, 2015)

Geographical Segmentation: Haigh currently serves only in three major cities of Australia and hence is currently restricted to the same

Demographic Segmentation: The purchases of Haigh are not restricted to a gender given that they sell premium chocolates (Kerry, 1998). The customers may be of either genders but the product is consumed mostly by women. They don’t target children due to the cost of the product. The age of the consumers is usually above 22.

Chocolate and Confectionary Industry in Australia

Behavioral Segmentation:  Haigh Chocolates have bite size options and are in restricted quantity per box. Most customers assume that the number of calories per bite are comparatively low when considering a huge bar. Also, the quality of chocolate is much better than any other brands and hence has a psychological influence

Psychographic Segmentation: Emotional eating which is rare with premium products and the other is the perceived status of gifting high priced chocolate boxes (Spoor, 20017).

Targeting

As mentioned earlier due to its significant price and premium products most of the products of Haigh are used for gifting purposes or for customers who are ready to pay a premium amount for high quality chocolate. The target hence are women usually in the age bracket of 20 to 50. The generation today have become conscious about calories which is an advantage for Haigh given their bite size portions instead of bars (Ried, 2009). The company do have bar chocolates but the most in demand are the bite sized.

Positioning

The value proposition of Haigh is because of the brand image they have. The company has been around from 1915 and has built the reputation for its extremely high quality. It is also a luxury product. The handmade making defines the richness of each of their chocolate. The positioning of Haigh is hence under the high quality, high taste segment that promises a true world class chocolate experience (Fosfuri, 2016).

Chocolate is a global indulgence. Be it in standalone bars, bite size snippets or usage in bakery preparations, chocolate has always had an international appreciation and a high quality chocolate is always in demand. The same stands true in the Indonesian market as well.

Indonesia is a South Eastern cluster of Islands situated in the pacific and Indian oceans. The country has an estimated population of 260 million with Java being the most populous Island. Indonesian sugar consumption has seen a steady growth over the years with a significant market share dedicated to Petra foods (Nieburg, 2013). The key competitor has chocolates available to several economic sectors and has an excellent reputation in the islands. An alluring market as such is always a good opportunity for globalization. And hence, is a potential market for Haigh Chocolates

To understand how the company has to strategize in the new market the segmentation, targeting and positioning of their products have to be analyzed (Choi, 2015).

Segmentation

Geographical Segmentation: Indonesia is spread over 735,358 square miles which is quite a lot for a company to market in. However, the most populous island Java is well known for its confectionary needs. This would be the best geography to start the business in. A better option would be to open one retail store in a bustling center and carry business online in Indonesia to reach maximum customers.

Demographic Segmentation: Haigh chocolates are not gender restricted and at the same time are not produced for kids. They are of high quality made with premium products and are a luxury brand. With a brand as such that usually goes for gifting, women are more likely to purchase such products. Also, the age of customers would be of an earning income hence 22 and above as the cost of products would restrict lower aged kids. Indonesia has significant corporates established and has a generous working category which would suffice the segmentation

Segmentation, Targeting and Positioning of Haigh Chocolates

Behavioral Segmentation: Occasional gifting is one segment where Haigh would have an upper hand given the quality and handmade features of the product. Hence, the product is highly recommended for festive seasons. Indonesians take pride in gifting as it is one way of showing respect. For the new market Haigh would have to prepare customized products for Indonesian festivals such as Nyepi, Waisak day etc., apart from Easter and Christmas.

Psychographic Segmentation: Impulsive eating is common to a country and so is it to Indonesia. The advantage with Haigh is that they have a large range of products that are bite sized and hence may not be seen as high indulgence. The Calorie counting segment are also considered by Haigh. It is a fact that dark chocolate can help out of depression and since Haigh’s comes in bite sized portions it is appealing (Chan, 2012). They also have products for Egg and Gluten free (Stringer, 2015).

Targeting

In the new market, it would be ideal to target the customers that have high purchasing power. This in Indonesia would be the women, who generally take care of purchasing gifts for family occasions and also prefer some self-indulgence. The working sector of women can be the target for Haigh to exploit as the preference of high quality, premium products would be in demand.

Positioning

Petra the key competitor and a significant shareholder in Indonesia has products for the lower economic group as well. Given the procurement cost, cost of goods sold, exports and overseas trade costs, it is highly unlikely that Haigh would be able to come down on its price. At the same time there cannot be a decrease in the quality of products (Stringer, 2015). Hence in Indonesia as well Haigh would be a high price high quality product

Conclusion

Haigh is a well know brand in the country of Australia for its exceptional chocolates that have been around since 1915. The companies that has been in the market for some time are currently trying to either diverge into healthier products or are in search of international expansion. For the global expansion, the market of Indonesia can be an alluring opportunity given the geographic distance and high earning market. The Segmentation is slightly different from that in the Australian market. However, the targeting and positioning of the same is similar in both the nations. In the above sections, various concepts were applied to understand how the company must strategize in the new market. The segmentation, targeting and positioning of their products have been analyzed.

References

Chan, E.K., Quach, J., Mensah, F.K., Sung, V., Cheung, M. and Wake, M., 2012. Dark chocolate for children's blood pressure: randomised trial. Archives of disease in childhood, 97(7), pp.637-640.

Choi, C.S. and Kim, K.H., 2015, June. Marketing MANAGEMENT IN SOCIAL NETWORK PLATFORMS: SEGMENTATION, TARGETING, AND POSITIONING. In 2015 Global Fashion Management Conference at Florence (pp. 97-102).

Evans, S. (2015). Cadbury plans to cut the size of its family blocks of chocolate to save costs. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/cadbury-plans-to-cut-the-size-of-its-family-blocks-of-chocolate-to-save-costs-20150202-1343wp.html [Accessed 3 Apr. 2017].

Fosfuri, A., Giarratana, M.S. and Roca, E., 2016. Social Business Hybrids: Demand Externalities, Competitive Advantage, and Growth Through Diversification. Organization Science, 27(5), pp.1275-1289.

Haighschocolates.com.au. (n.d.). About Us - Haigh's Chocolates. [online] Available at: https://www.haighschocolates.com.au/about-us [Accessed 3 Apr. 2017].

Kerry, C., 1998. The Haigh's Book of Chocolate. Wakefield Press.

Nieburg, O. (2013). Indonesian sugar rush sweet news for Petra Foods...but rivals could be lurking. [online] ConfectioneryNews.com. Available at: https://www.confectionerynews.com/Markets/Indonesian-sugar-rush-sweet-news-for-Petra-Foods-but-rivals-could-be-lurking [Accessed 4 Apr. 2017].

Pyo, S., 2015. Integrating tourist market segmentation, targeting, and positioning using association rules. Information Technology & Tourism, 15(3), pp.253-281.

Ried, K., Frank, O.R. and Stocks, N.P., 2009. Dark chocolate or tomato extract for prehypertension: a randomised controlled trial. BMC complementary and alternative medicine, 9(1), p.22.

Spoor, S.T., Bekker, M.H., Van Strien, T. and van Heck, G.L., 2007. Relations between negative affect, coping, and emotional eating. Appetite, 48(3), pp.368-376.

Stringer, R., 2015. Vanuatu: Bean to bar: Vanuatu chocolate. Partners in Research for Development, (1), p.10.