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Rogers' Chocolate Case Analysis

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by

Jordan Schwartz

on 26 March 2014

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Transcript of Rogers' Chocolate Case Analysis

Company Background
Rogers' Chocolate Case Analysis
External Analysis
Internal Analysis
Business Level Strategy
Corporate Level Strategy
Growth Options
Issues & Goals
Issues
Growth in sales have slowed
Losing market share
In-house production problems
Charles "Candy" Rogers' Chocolate in 1885
Canada's oldest chocolate company
Based in Victoria, British Columbia (second oldest company in BC)
Rogers' head office is located above flagship store Inner Harbour area of Victoria, near the world famous Empress Hotel
Goals
Double or triple the company
Build brand awareness
By: Jordan Schwartz, Tom Viera, Carly Lohr, Sin Chung, and Alex Hamboyan
PESTEL
Political
-Competitors seeking redefinition of “chocolate” under USFDA to save costs

-Potential for entry into the United States

-New political pressures
Economic
-Canadian chocolate market growing at 2% annually while global rate falling.

-Premium chocolate market growing 20% annually.

-25% sales in 8 weeks leading up to Christmas

-With the Great Recession also affecting Canada, consumers have less disposable income
Sociocultural
-Trend for healthier diets, organic products, and with no trans fats. (Aging baby boomers desiring higher quality).

-Higher demand in dark chocolate, in part because of heart-healthy & anti-oxidant traits.
Technological
-May want to focus on tech. that other larger competitors utilize, such as forecasting models for sales so that they don’t short-out on inventory.

-Increased internet shopping of younger demographic is a huge opportunity.
Environmental
-Consumers and employees have environmental concerns.

-Question of involvement in West Africa.

-Pressure to be environmentally sustainable.
Legal
-Non-union vs. union practices

-Varying laws outside of Canada for expanding business practice.
Porter's Five Forces
Power of Buyers


-Low

-The main ingredients of cocoa bean, sugar, and milk are so common that they can be cheaply acquired

-Chinese supplier of tins often inconsistent due to lack of electricity but other cheap options present
Power of Suppliers:


-Low

-Entry into premium chocolate market requires large capital investment for branding and
production facilities

-There are already both major international players and regional, high quality brands with
loyal followers
Threat of New Entrants
-Low

-Rogers has unique price points and quality that are not
easily obtainable by customers

-Distinctive and exclusive taste


-Rather high

-Numerous brands of higher and lower quality/price points, even similar premium regional
products

-Candies and cookies could also steal sales
Threat of Substitutions


-Low

-20% industry growth in premium chocolates indicates less intense rivalry.

-High levels of product differentiation equate to brand loyalty
Industry Rivalry
Inter-firm Rivalry


-High-end packaging, high price points

-Widespread distribution (backed by Nestle)

-Still lower quality

-Differentiation in shapes and colors
Godiva


-Excels in new flavor introductions

-Superior and customizable packaging

-Still higher price points
Callebaut


-Well established brand

-Packaging and quality mid-range

-Slightly lower price points than Rogers

-Also produce the Ghirardelli brand (higher quality)
Lindt
-Price point significantly lower than Rogers, quality also lower

-Packaging and store displays very good
Purdy's
-Include extremely high-end custom chocolatiers that have
Belgian suppliers.

-Others had utilized a franchise model and sold candy along
with chocolate in their stores. (Varying store concepts)

-Some still with higher price points even with lower quality

-Hershey’s and Cadbury's much more established supply lines
and marketing. Moving into premium chocolate market.
Other Competitors
Strategic Groups
-Rogers’ Chocolates would fall under the Focused Differentiation Strategy because of their wide
variety of premium products.

-They include Victorian creams, truffles, nuts, bark, chews, pure bars, fondue blocks, caramels, brittles, non-sugar products, gift sets, and hand-wrapped products.
SWOT Analysis
Strengths
Premium high quality chocolate
Long business history with experienced management team
Devoted & passionate employees
Customer loyalty
Well established and reputable brand
Quality products & hand wrapped
Knowledge of products
Award winning recognition
Weaknesses
Old technology
Doing accounting and packaging by hand
Not well known
Production process- not efficient and no measuring capabilities
Demand forecasting- difficult due to seasonality of sales
Management's and Employee's resistance to change
Lack of brand image and customer awareness
Cost of setting up and cleaning equipment
Inventory Management- Out of stock and over stock
Lack of online sales
Opportunities
Sources of Revenue
Retailing through company owned stores

Located in tourist areas including :
Victoria, Whistler, Granville Island and Gastown or at BC Ferry locations

Wholesaling chocolate products

Online & Mail order

Sales from Sam's Deli
Notable Awards
2000 Retail Council of Canada's Innovative Retailer of the year in Small Business
for demonstrating outstanding market leadership and innovative approaches to customer and employee relations, creative ideas & strong delivery

2006 Superior Taste Award by International Taste & Quality Institute

Rogers' Main Products
High quality, hand-wrapped chocolates
Premiere line
Victoria Creams
truffles, nuts, chews, almond bark, nutcorn and various assortments
Specialty items including chocolate covered ginger and caramels
Premium Ice Cream
Target Markets
affluent customers who seek a luxury experience and superior taste
customers seeking an elegant and unique gift item
Loyal customers who appreciate the quality product and good old-fashioned service
Rogers' Current Standing
Steve Parkhill is the current president of the company as of 2007

Board of Directors wants Parkhill to double or triple the brand by 2017

Pros
Privately owned company

Traditional company

Potential opportunities
i.e. Vancouver Olympics
Cons
Each board member has different ideas

Unknown risks of future development

Retail and Online Expansion
Increased production capacity
Trends and shifts in customer confectionery market
2010 Olympics
Joint Partnerships
Kiosks in airports
Second shift possibilities
Organic and/or Fair Trade Line
Threats
Economy and demand fluctuations
Competitors
Consumer traffic- decrease in tourism
Environmental concerns and human rights concerns
Governmental FDA rules "redefining" chocolate
Easy entry of new firms
VRIO Analysis
1. Status Quo
2. Product Enhancement
3. Market Development

Status Quo:

Natural Market Growth

Keep with same traditions
Product Enhancement

Product Differentiation

Improved Packaging

Online Presence
Market Development
Enter New Market

Build on Core Competencies
Our Recommendation?
A Mix of Product Differentiation and Market Development
Implementation:
Step 1:
Evaluate Production processes. Try to generate cost savings that can be used to invest in Step 2.

Step 2:
Hire a marketing consultant and launch a marketing campaign to improve the company's brand image.
Part 1: Update packaging
Part 2: New advertising methods and target consumers

Evaluation of Production Processes: Measures of Productivity and Efficiency
None currently exist within facility
No accountability of waste

Waste Managment
Proper tracking
Knowing where the problems are allows efforts to be focused on those problems
Tracking and reducing waste can lead to cost savings

Come up with 3-4 potential designs

Compare Rogers' packaging with other competitors

Attractive online advertisements that target higher income, quality conscious consumers

Social networking sites (Facebook, Twitter, LinkedIn, Google +)

Marketing Campaign
Plan Leading to Profitability

Trade-offs: Reducing costs in the production process

Opportunity costs: Franchising and building new stores

Benefit-risk Analysis:
Increased sales
Decreased costs

Value Chain Analysis
Rogers' Chocolates needs to employ a forward integration model for getting closer to their customer base
Focused Differentiation
Uniqueness of Rogers' Chocolate
Hand Wrapped Chocolate
Creates a higher worth and loyal customer base
Customers feel more attached to the company

Retail Store Experience
Uniformed staff engaging customers
Free Samples
Strong aromas
It is serving the niche market of wealthy consumers, people who are willing to spend extra amount for the chocolate of their choice
Competitive Advantage
The main competitive advantage for Rogers is that it is able to serve the niche market with high quality chocolates which are highly valued by its consumers
Core Competencies
Tradition, history, and world famous recipes

Strong Brand Image

Loyal customer base

Seen as a desirable product

Unique, old-fashioned service
Corporate Diversification
Looking to expand into other Canadian Territories

Expand to US Markets

Extend Wholesale outside British Columbia
Improvements To Be Made
Brand image renovation while still maintaining the steady balance tradition and modernization

Increase internal capacity through:
Improving production processes, and
Adding technology to the packaging step
Full transcript