Marketing Management of the Chocolate House - Assignment Example

Running Head: BUSINESS STUDY UNIT 7 Business Study Unit 7 in APA Style by P1 and M1 Introduction to business and product The Chocolate House operates with the utmost goal of providing customer value through the manufacture of hand-crafted and homemade chocolate and chocolate products in the UK market. Instead of battling head-on with large industry players like Cadbury and Nestle which serves the mass market, The Chocolate House will opt to capture the niche market comprised of higher income customers who prefers products which are more indulgent, made from more natural ingredients and with guaranteed freshness. Recognizing that the firm offers a product with both a tangible and intangible component, The Chocolate House will also emphasize on extending excellent customer service to complement its high-quality products. The main product of the company is branded as Swiss Classic and will be marketed in four outlets all over UK together with other product lines such as diabetic collections, organic treats and other specialties. Promotional objectives Product Information: Swiss Classic draws inspiration from the ancient Swiss culinary which is known as the maker of the best chocolate in the world. The product will come in different shapes and sizes according to the preference of the customer. The Chocolate House will also offer customized packaging which allows the buyers to choose from brown and gold packages. Swiss Classic's price will range from 10 for three small chocolates to 30 for three large ones. Aside from being sold in company-owned retail outlets, Swiss Classic can also be delivered for an additional charge and can be bundled with wine, bouquets and cards when used as gifts. Creating Demand This promotional objective allows the firm to provide value to its customers thereby ensuring the steady inflow of sales. Because the chocolate is popular and widely consumed by the UK market, The Chocolate House's main task is to capture the appropriate niche for its products. Demand creation enables the company and the product Swiss Classic to succeed and even merely survive in the industry. Inadequate demand in the long run will force the company to withdraw and close down. Thus, this objective is pivotal in the survival of the business organization. Creating Image This promotional objective allows the firm to differentiate itself among the numerous competitors in the industry. By occupying a definite position in the customers' minds, The Chocolate House be assured of strong brand equity and recall from its market. The firm will do this by emphasizing on product quality, ensuring freshness through the use of cocoa butter instead of vegetable fat, pricing higher than its competitors, delivering excellent customer service, and designing its outlets as a place for indulgence. Since The Chocolate House is competing through a differentiation strategy, image creation is important in order to stress its uniqueness. The company should always stress what separates it from competitors that customers should patronize its products. If this is not pursued, it might end up being one of the others or worse, it might not be able to win any customer at all. Increasing Sales This promotional objective allows the firm to ensure growth within its market. The Chocolate House will use intensive marketing effort like advertisement and promotions in order to penetrate the UK market and capture higher shares. Through the years, it is the general goal of a firm to grow its market share and consequently its sales. Growth in sales signals the company's efficiency and success in its promotional efforts and overall strategic management. Increasing Profits This promotional objective allows the firm to achieve its goal of maximizing shareholder value. Increasing profits will be ensured through the efficient allocation of promotional budget. The company will also regularly review its pricing strategy in order to ensure maximum profitability. Increasing profits even though not a primary goal of The Chocolate House is very much beneficial. This indicates the company's efficiency in costs and resource allocation. Increasing profits also means more funds which can be invested in order to further develop and promote Swiss Classics and other product lines. P2 (M2 and D1) The Chocolate House will employ the following promotional activities in order to attain its objectives listed above: 1. advertising in magazines which the target market reads and subscribes to and also in billboards; 2. point of sale presentation such as branding and packaging; 3. promotions during special occasions like Valentine's Day, Mothers' Day, and Easter Sunday; and 4. direct marketing through internet and direct mail. This also recognizes that these promotional activities have advantages and disadvantages for the business organization. The utilization of advertising using the media which the target market is likely exposed to enables The Chocolate House to promote Swiss Classic directly to the audience that it wants to reach. However, this is also very costly for the business organization. Point of sale presentation such as branding and packaging does not only enhance customer value but also boosts the image of the Swiss Classic. This can strongly motivate buyers to sample products which they do not originally intend to buy. However, focusing on point of sale presentation presents more costs to companies as enhancing them means investing funds on better packaging. The Swiss Classic will be marketed as gifts for special occasions in order to stimulate demand during these seasons. Doing this will enable The Chocolate House to attract more customers by adding value-added products like flowers, wines, and cards. These value added goods can also be profit generating for the company. However, promotional activities like this can limit the usability of Swiss Chocolate as a gift and not as something for everyday consumption. This can also lead to seasonality of sales. The Chocolate House can harness the benefits from having an online business model to complement its brick and mortar operation. By having its own website the company can reach anyone in the UK and the whole world who may want to purchase their product. This can also enhance customer value by customizing buyer experience. However, this direct marketing promotional strategy also exposes the company to the risk of not reaching its intended audience. It should be noted that The Chocolate House will also need to invest in the searchability of its website. P3 The following table shows The Chocolate House's lists of promotional activities during the whole year of 2008. Costs and justifications are also given in order for the business organization to estimate its financial needs and focus on generating the necessary return on their promotional expenditures. It should be noted that during the first year, it is expected that The Chocolate House will be allocating huge budgets for in promotional activities in order to build brand and product awareness as well as create demand. Before its official launch of Swiss Classic in the market, the company will already advertise in order to stimulate curiosity among potential buyers of its products. Month Promotional Activity Costs and Justification January Stimulate Curiosity Billboards Magazine Advertisements 375 will be allocated for the billboard advertisement 200 which covers 50 for each 4 magazines where ads will be placed February Product Launching Valentine's Day Point of Sale Promotions Including Posters and Samples Sales Promotion Where Buyers Can Add Flowers, Bouquet, and Cards to their Purchases 200 which will cover 100 posters and distribution cost 395 will be allocated for additional services costs, leaflets, and posters April Easter Sunday Point of Sale Promotions Including Posters and Samples 200 which will cover 100 posters and distribution cost May Mother's Day Point of Sale Promotions Including Posters and Samples Sales Promotion Where Buyers Can Add Flowers, Bouquet, and Cards to their Purchases 200 which will cover 100 posters and distribution cost 395 will be allocated for additional services costs, leaflets, and posters December Christmas Day Point of Sale Promotions Including Posters and Samples Sales Promotion Where Buyers Can Add Flowers, Bouquet, and Cards to their Purchases 200 which will cover 100 posters and distribution cost 395 will be allocated for additional services costs, leaflets, and posters All Year Round Website Update 500 which will cover maintenance, search engine companies, and manpower cost P4 and M3 Two of the promotional materials which the company will be using will be described in this section namely magazine and internet advertisements. 1. Magazine advertisement will feature a full page picture of the Swiss Classic chocolate emphasizing the unique attributes of the company's products including freshness and its high quality derived from its heritage of being a Swiss original. The advertisement will highlight the packaging as well as the product itself in order to appeal to the buyers' appetite. The addresses of the company's outlets as well as the contact numbers and website will be printed in small fonts at the bottom of the advertisement. The Chocolate House's tagline will also be included. It is expected that the magazine advertisement will stimulate customer demand and build the image of The Chocolate House and the Swiss Classic as an indulgent good and gift for special occasions. Customers will be more informed and more motivated to buy the company's products and will be able to differentiate it from the offerings of the competitors. 2. The Internet will be used by setting up a website for the company where each product and product lines can be featured. There will also be an option to order online. In order to enhance this material's efficiency, The Chocolate House will also be paying search engine companies like Google and Yahoo for placements. A website will be a good way to reach customers. Online advertisements through websites increases visibility to the company's target market. This is also value-adding because it provides more convenience in terms of ordering and delivery. The effectiveness of the promotional activities in attaining The Chocolate House's promotional objectives will be assessed by looking at the some quantifiable variables such as number of customers who visited the website and the outlets and the increase in turnover. Each time a promotion will be launched, the company will monitor the sales level before and after the activity. On the other hand, The Chocolate House will also track the number of website visitors and the number of those who order online. The Chocolate House will also be conducting surveys in order to ascertain the image of the Swiss Classic formed in the customers' mind through the different promotional activities. This will allow the company to examine if it is making the right impression to its target market. P5 The operation of The Chocolate House as with any business organization is bounded by legal and ethical constraints. In order for it to continue its operation and create a good image in the society, it must make sure that it complies with the standards set by institutions including the Trading Standards Office and The Advertising Standard Authority. The following table shows the ethical and legal constraints that the company faces as promulgated by different acts and laws, its definition, and links to its various planned promotional campaigns. Ethical Constraint Definition Link to the Promotional Campaign Trade Descriptions Act This prevents manufacturers, retailers, or service industry providers from misleading customers as to what they are spending their money on. In each of the promotional activities of The Chocolate House, it should ensure honesty and truthfulness about product quality and features. Fierce competition should not encourage the company to make false claims about its offerings. This will include advertising as well as product labeling. Sales of Goods Act and Supply of Goods Act This requires traders to sell goods that are as described and of satisfactory quality and provide services that are to a proper standard and workmanship. The promotional activities of The Chocolate House emphasize the quality and freshness of its products. The company should also strive to deliver this freshness and quality through a very strict quality control in the production process. Consumer Protection Act This prohibits the supply of unsafe goods. The Chocolate House will ensure the freshness of its product so as not to cause any damage or injury to the customers. Also, as it opts to use cocoa butter as opposed to the vegetable fat which has a longer shelf life, the company needs to constantly monitor the age of its inventory in order to avoid selling products which are unfit for consumption. M3 Identify the results of the campaign The results of the campaign will be monitored using two criteria-sales figures and the number of customers visiting its store premises and website to order and buy its products. The Chocolate House will track the sales of Swiss Classic before, during, and after each promotional campaign in order to link the increase in sales with the activities. The company will also track the number of store and website visitors before, during, and after campaigns. Consider whether the objectives of the promotional activities been met At the start of the year, after finalizing the set of promotional activities which should be in place, The Chocolate House will also project the increase in sales and profits which should be attained due to each promotional campaign. After the activities, the company will then compare the projected sales with the budgeted sales to see if the projections have been met. The company's market share will also be monitored against the increase or decrease of the industry's sales and competitors' shares. Consider whether the promotional activity was appropriate The appropriateness of the promotional activities will be measured through the response of the customer. Sales will be an indicator as well as the perception of the target market. Thus, The Chocolate House will opt to employ market research after each campaign in order to know what the customers think about it and gather suggestions for future promotional activities. Consider whether the message has been communicated The Chocolate House's goal in its promotional activities is to build and enhance its image in the minds of the customer. In order to ascertain whether the right message is communicated, the company will conduct surveys in order to uncover what the customers think about the company as opposed to its various competitors. Aside from this, a focus group will also be beneficial in order to reach consensus on how the company and its products is viewed in the market. Bibliography Department of Trade and Industry 2007. Retrieved 19 April 2007, from http://www.dti.gov.uk/ De Witt, B. and Meyer, R. 1998, Strategy: Process, Content, Context, 2nd ed., Oxford: International Thompson Business Press Kotler, P. 2005, Marketing Management. Upper Saddle River: New Jersey Read More