Marketing Communication Plan for Divine Chocolate Company - Essay Example

Marketing Communication Plan for Divine Chocolate Company TABLE OF CONTENT 0.0 ………………………………………………………………….3 0 Introduction………………………………………………………………..4 1.1 market trends……………………………………………………...5 1.2 the nature of competition………………………………………….6 2.0 Current state of marketing communication of divine chocolate………..7 2.1 position in the market share………………………………………8 3.0 A new viable communication plan…………………………………….….9 3.1 Quality and affordability………………………………………….9 3.2 Raise awareness of the fair trade challenges……………………10 4.0 Conclusions………………………………………………………………..11 5.0 References…………………………………………………………………13 0.0 Abstract Set within the challenge of stiff competition facing the divine chocolate market segment, this article seeks to explore the most effective alternative to facilitate the consumption of divine chocolate beyond the borders of its competitors. Divine chocolate which is a, Fair-trade company connects Ghana’s cocoa farmers into the global market. As opposed to its competitors, it is the only brand that has its farmers holding 45% of the shares in the company. Divine it still struggling to gain recognition in highly dominated industry, major player in this sector includes Cadbury, Nestle and Master food. They create barriers in the distribution channel by offering attractive bonuses to retailers who surpass their preset targets. Divine also lacks the international economies of scale that the dominators enjoy. In a research conducted in 2007 divine held 0.3% of the total chocolate sales in the UK as compared to 83% market shared by the three dominates. The use of fair-trade certification has contributed significantly to the marketing communications of divine chocolates to the consumers. A research conducted in 2007n proved that most consumers had left other chocolate brands in favor of Divine due to the mark of quality and its splendid taste. It therefore, has been suggested that Divine should develop a marketing plan focused on communicating it product to retailers and final consumers on the basis of fair pricing, product differentiation and emphasis on quality. In conclusion, it has been established that though divine is a small organization it has a high potential of the top of the value chain. It all the features required to get their only solution is adopting a communication plan focusing on the retailers and attaining economies of scale. 1.0 Introduction Divine chocolate company, is a manufacture fair-trade chocolates in UK and United States, marking its first establishment in the UK in 1996. It partners with Kuapa Kokoo cocoa growers from Ghana, comic relief and Christian aid. It has a unique trading system; the farmers are the main shareholders in the company. Its first product, Divine milk chocolate, has been launched in late 1998. Another range of its products include dark chocolate and drinking chocolate; it launched another product in 2000 called dubble, in collaboration with comic relief. The brand was later on launch in the US in early 2007. Currently three main organizations own divine chocolate company. These organizations include Kuapa Kokoo; a group of cocoa producers from Ghana own 45% of the shares, Twin trading based in London own 43% of the shares and Oikocredit owns 12% of the shares. In 2008 divine chocolate got the best ethical business. In 2007, it won the best social enterprise award; and labeled the favorite fair-trade product in 2008 according Good housekeeping. This article seeks to demonstrate the effective marketing communication strategy that is central to achieving sustainable consumption. The overall mission of Divine chocolate was to improve the lives of smallholder cocoa producers in Ghana from West Africa by setting them in UK chocolate market; thus putting them higher up the value chain. To attain this mission a range of clear intermediate objectives are identified (Tiffen 1998): To effectively pay a Fairtrade price for all the cocoa consumption in the chocolate sold. To create awareness of fair trade shortcomings among UK consumers and retailers of all age groups. To supply affordable and quality range of Fairtrade chocolate into the UK market mainstream. To be significantly visible and vocal in the chocolate sector thereby acting as a catalyst for change. 1.1 Market Trends The chocolate industry encounters stiff competition though there are high entry barriers in the market (Mintel, 2003). The launching of new brands in the market has been insignificant in the past decade. The market reflects characteristics relating to highly competitive markets defined by the concentration of power to given dominant brands. In his research conducted in 2005 to 2009 Euromonitor (2005-2009) revealed that, despite product variation, the sales turnover of chocolates in the U.K was highly static. The retail market capacity in 2005was recorded at £3,867. The retail price in 2009 was £3,756 this shows an insignificant change in the retail market sales. In the block chocolate category divine in the UK divine represented almost 90% of sales by the milk chocolate. Milk chocolate (20-28% of cocoa components) currently dominates the UK market. In a different report by Simms (2006) stated that block chocolates that contained 70% to 80% cocoa market share increased by 17% in 2008 this accounted for close to £25m of a £532m in the block chocolate category. 1.2 The Nature of Competition The three leading brands in chocolate manufacturing are nestle, Cadbury and Masterfoods. Their combined market share value approached 80% in 2002. Cadbury enjoys the largest share in the blocked chocolate sector at approximately 55% according to the research conducted in 2007 (Simms 2007). In is practically impossible for smaller firms to penetrate the economies of scale enjoyed by these major players. According to Euromonitor (2003) the national players dominate in the product variation, fair pricing and effective distribution that is difficult for small producers like divine chocolates to meet. In the resent years retailer and independent distributors have gained significant power in this market. According to Mintel (2009) supermarkets and retailers purchase close to 49% of all chocolate sold in the UK in 2009 as compared to 43% in year 2003. Euromonitor (2010) argues that this could be attributed to the agreement between leading manufacture and the retailers for higher discounts in the actual purchase. The head of Co-op brand and technical, Sir, David Croft claimed that gaining distribution in this market sector was extremely difficult since the retailers would not jeopardize large annual payments by introducing a new brand (per’s Comm. 2004). The retailers managed to achieve an annual bonus payment from the manufactures in the case that they surpassed the preset targets. This measure simply blocked out any small manufacturer intending to retail its produce in the chocolate industry. The retailers claimed they would lose too much if they considered double stocking. According to Joanna (2004), the saturation of power manifests its self in the form of “category captains.” This works in such a way that a supermarket retailer appoints a key supplier for a brand hence their “partner or captain". Therefore, they manage the product jointly with the retailer. The “captain” gains power over its competitors in terms of product supply. Divine chocolate was first listed in 1998 by a substantial supermarket retailer where it attained a remarkable performance. Despite its performance; in early 1999 Divine and small manufactures received a fax informing them that they were de-listed from the product range in favor of a major manufacturer. The challenges mentioned above have proven to be Divine chocolate’s paramount concern in relation to their partnership with the fair-trade company. Moreover, divine chocolate pays more its cocoa and for the use of Fairtrade mark for its products. It also focuses on payment of its Kuapa farmers, to provide the necessary support and development. 2.0 Current State of the Marketing Communications of the Divine Chocolate According to research conducted (2003) to investigate the consumer trends, Divine chocolate met a significant percentage of the success factors considered by most consumers. Its appearance, taste, quality and texture were the features most preferred. Divine chocolates contain quality cocoa naturally formulated vanilla and the GMO free products. It has outstanding taste attracts most consumers from its competitors. Fair-trade claimed that taste profile of divine chocolate was outstanding in comparison to Green and Blacks. Green and Blacks have spent a wide range of resources to perfect its chocolates taste. Currently, Divine boosts a range of 15 products, which includes darkly divine that has 70% cocoa content. According to telegraph (2004), divine recorded an outstanding performance in the taste test conducted by chocolate experts. In late 2000 Divine partnered with Comic Relief; the first fair-trade chocolate snack. 2.1 Position in Market Share Currently divine is still a small company struggling with the major players. In the UK, the chocolate market was worth £4 billion per year in 2007. Out of this the three multinationals Cadbury, Nestle and Master food controlled 86%. Divine only enjoys a market share of 0.3 percent under its name. During this year, its sales accumulated to £12 million, making a profit of £0.6 million. In 2009, its sales amounted to $20 million in the U.S where it launched in 2007. Influence and use of Fair-trade communication on Divine Marketing Communication Plan The fair-trade label was designed to enable consumer identify goods that meet preset standards (Crane & Matten 2004). The standards were established by the standard setting body FLO international. FLO-CERT is the certification body. In the marketing mix system communication plays a key role. Fair trade is the channel through which customers gain visual approach to corporate image and the products they offer. This paper also seeks to determine whether the preference of divine chocolate increased or decreased based on the fair-trade label. Fair-trade marked goods in the UK had grown significantly since 2003 by 58% to 2009 when it estimated valued approximated £4.6 billion (fair-trade foundation 2009). According to the UK fair-trade foundation (2009) close 80% of UK consumers identify the fair-trade mark which has resulted to an increase in sales of its marked goods. According to consumer trend and tracking studies conducted on 2007 the effect marketing communications is evident. Two-thirds of Divine chocolate consumers surveyed claimed that Fairtrade awareness coupled with widespread availability of Divine and Dubble reduced their consumption of competitor chocolate. In that consumer study, the outcome reflected that 11% of Divine supporters shifted to Fairtrade for the first time. It also indicated that 40% of the Dubble consumers had never made a Fairtrade product purchase before. 3.0 A New Viable Communication Plan The mission of divine chocolate is to improve the lives of small scale cocoa producers in West Africa (Ghana) by establishing their own dynamic and diversified brand proposition in the UK chocolate market thus placing them high in the value chain (divine chocolate 2008/9 annual report). To achieve this mission their marketing plan should focus on social and business objectives mentioned in the introduction. 3.1 Quality and affordability To achieve the business objective, divine chocolate ought to cut down on its prices. Cadbury dominates the market share due to economies of scale it enjoys internationally. Divine should focus on expanding its economies of scale to meet every consumer’s pocket. Simms (2004) Proposes that quality but affordable pricing model has been influential in mainstreaming Fairtrade chocolate. He argues that occupying a super-premium price positioning (60–70%) premium on market leader) has prevented brands such as Green and Black’s leveraging a stronger position. Affordability can be achieved through diversity in the products in terms of size and contents which will intern create a product that feats every consumers pocket. Previous consumer research indicates that outstanding chocolate quality and taste draw consumers towards a product hence reducing competition. A key to mainstreaming fair-trade chocolate is often defined by the unique taste it provides (Gould, 2004). Despite affordability and issues relating to quality, Divine ought to diversify its product strategy. For instance divine milk, original design reflects all the attributes of the market leader, from its packaging, color and size. It was initially assumed that this would make an enormous success, but the post launch report revealed the opposite. Mimicking the market leading lower the uniqueness associated with the brand. Consumers could not easily spot the product on the shelves based on the common and poor appearance. Currently divine product range totals to 15 as compared to its competitors there is much to be done to raise the chain. Divine should expound on its cocoa supply in order to attain the coca needed for product variation 3.2 Raise awareness of the fair trade challenges Divine has an aim to excel at marketing communications. Divine has a key strength in their ability to broadcast their outstanding story and achieve wide media coverage (Brad Hill the Marketing Development Manager at the CRG). Their product can provide an easy way to address the meaning and objectives of fair-trade. Divine can as well affect the retailer interview it has previously held with retailers; as earlier explained, major players in this industry block the retail purchase of other brands by offering lucrative deals. By visiting potential buyers and presenting their products and captivating story, most retailers have gained interest this chain of supply. To succeed in its mission, Divine chocolate should as well partner with organizations that add value to its mission. Its partnership with CRG was way beyond monetary value, they exercised a create deal of flexibility in their operations. David Croft the head of Co-op brands claimed that their Fairtrade funded marketing activity, assisted in mainstreaming fair-trade and could be the key factor that stimulates other retailers toward the use of fair-trade line (Personal communication 2004). 4.0 Conclusions According to Page and Slater (2003) divine chocolate exhibits a unique government structure as opposed to its competitors. It understands its producers needs and at the same time competes to market their products. The core challenge facing Divine chocolate brand is competitive forces which are dominated by the likes of Cadbury, Nestle and Masterfoods. These dominant brands experienced decades of marketing and advertising that small companies have not experienced. Therefore, they significantly threat to the development of small companies like divine chocolate. This article has mainly addressed the challenge of accessing retailers and leading supermarket. This challenge was initially resolved by the presence of The Body Shop, in the ownership structure. In creating consumer awareness, Christian Aid has significantly contributed through their active chain of consumers and Comic Relief with their brilliant brand and innovative strategy to marketing for the Fairtrade chocolate brands Divine and Dubble. This has helped Divine overcome some of the problems resulting from low marketing budget in this market sector. In the marketing a Fairtrade product, developmental processes and verification of Fairtrade standards ought to be followed. Twin Trading and Kuapa Kokoo have done a recommendable job in underpin the Divine “bean to bar” story. This proved to be so influential in helping Divine succeed in marketing communications. The unique story and excellent tasting chocolate have enabled Divine chocolate to achieve wide media coverage beyond expectations as it built on public relations strategy. Divine has created marketing networks on satellite TV to develop TV advertising campaigns and sponsorship of high profile TV programs. The unique story, play a significant role in the responsible retailing strategy (Co-operative Retail Group to) this resulted to a historic switch of all their label chocolate business to Fairtrade and a substantial international media feature on BBC News 24. Another factor to mainstreaming Fairtrade chocolate is the outstanding taste that was perfect from the foundation. It boasts a Divine range of 15 products, which have attracted may consumers for their excellent taste. A fascinating fact is that Darkly Divine is currently outperforming Divine milk chocolate in key retailers. It shares are rapidly growing, of the 70-80% cocoa solids block chocolate segment with its initial calculations reflecting a market share of between 2-3% in this segment. Divine has gained distribution in over 5,000 UK retail outlets resulting from its outstanding attributes in product and communications. Robins and Roberts (2003) claim that sustainable trade is attained when the international exchange of goods & services creates positive social, economic and environmental benefits. It is the first to create an awareness of Fairtrade to teachers and children and the first to advertise on TV. Divine is the only company where the producers own 45% of the company shares among its competitors. It is the first fair trade company to bring Fairtrade chocolate into the mainstream UK market. After five years in the chocolate industry divine demonstrates a viable business model achieving both its social and business objectives. However, Divine still faces the challenge of meeting its mission of improving the lives of cocoa producers. The main barrier to achieving this mission is lack of economies of scale the dominant organizations enjoy. If Divine could focus more on facilitating communications with the retailers, introduce further product variation and induce fair pricing it will be on the right path towards the achievement of its goals. 5.0 Bibliography Blythman, J. (2004) Shopped, Fourth Estate, London Brown Barratt, M (1993) Fair Trade: Reform and Realities in the International Trading System Zed Books, London & New Jersey Cafédirect (2002) Cafédirect Annual Report 2002 London Clarke, B (2003) “Brands are now judged on what they do, not say” Marketing UK Co-operative Group (2002) Co-op Chocolate Report: A campaign for Fairtrade chocolate and an End to exploitation, Co-operative Group Published November 2002 Crane. A & Matten. D (2004) Business Ethics, Oxford University Press Day Chocolate Company (1998) Report on the Launch of Divine October 1998: Sales & Marketing Report DfID (1997) Eliminating Poverty White Paper London Doane, D (2001) The Ethical Purchasing Index- taking flight: the rapid growth of ethical Consumerism New Economics Foundation 2001 Duncan, S (May 1999) Millennium Products- a CBI News/Design Council Report “Thinking Outside the box”, CBI Newsletter, London Eagles, C. (2001). “Analysis: with coffee producers unable to solve coffee Crisis has the time Come for renewed producer-consumer market co-ordination?” available at www.reports@commodityexpert.com Fairtrade Foundation (2010) Spilling the Beans on the coffee trade, London Fairtrade Foundation (2007) Fairtrade Foundation Annual Review Fairtrade Foundation (2002) Fairtrade Foundation Newsletter Spring 2003 London Fairtrade Foundation (2004) Fairtrade Foundation Licensees Report Gray, R (2003). “Badge of Belief” Marketing Magazine 23rd October 2003 p.23-24 Guardian Newspaper (1998). ‘Divine launch’ November 6th 1998. Vidal, J (2003) ‘Retail Therapy” The Guardian Society 26 February 2003 Hooley, G, Saunders, J & Piercy, N (1998) Marketing Strategy & Competitive Positioning 2nd Edition Prentice Hall Europe London International Cocoa Organisation. (2001). ICCO. Available at Johnson, G & Scholes K (1999). Exploring Corporate Strategy Prentice Hall, Europe Read More