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Marketing Environments - Chocolate Confectionary Market

Extracts from this document...

Introduction

Marketing Environments Chocolate Confectionary Market AEF 207 Sarah Quinn 030942859 CONTENTS PAGE 1.0 Executive Summary .......................................Pg3 2.0 Situational Review...........................................Pg5 3.0 Marketing Environment.....................................Pg6 4.0 Macro-Environment.........................................Pg6 4.1 Competitors...................................................Pg6 4.2 Customers......................................................Pg8 4.3 Suppliers.......................................................Pg9 4.3.1 Supply Chain .................................................Pg11 4.4 Intermediaries................................................Pg11 4.5 Shareholders...................................................Pg12 5.0 Trend Analysis...............................................Pg12 6.0 New Product Development...............................Pg12 7.0 Macro-Environment.........................................Pg14 7.1 Swot Analysis ................................................Pg14 7.2 Porters Analysis..............................................Pg14 7.3 Pestle Analysis...............................................Pg19 8.0 Conclusion....................................................Pg23 9.0 Recommendation...........................................Pg23 10.0 Research Portfolio......................................................Pg24 1.0 EXECUTIVE SUMMARY * The largest confectionary sector in 2003 was chocolate confectionary, and it will remain the largest in value terms throughout the forecast period (2003-2004 although volume sales of sugar confectionary will overtake it by 2005 * The largest single chocolate confectionary market remains the US, both in terms of value and volume sales. However, growth in this market has slowed considerably owing to maturity in the market. * Leading regional manufactures in 2002 include Hershey Foods in North America, Pfizer in Latin America, Lotte in Asia-Pacific, Nestle in Western and Eastern Europe and Cadbury Schweppes in Australasia and Africa and the Middle East * The leading distribution channel remains supermarkets/hypermarkets, although convenience stores are growing in importance as manufacturers focus on the impulse channel. This is an attempt to avoid the downward price pressure applied to the consolidating supermarkets/hypermarkets sector. * Seasonal chocolate, tablets and boxed assortments, especially twisted wrapped miniatures aimed at the adult snacking market will see the most dynamic growth over the 2003-2008 period. * Disposable income is an important factor in the rise of chocolate in developing markets. If they are facing economic uncertainty or if chocolate prices increase, then they will use cheaper sugar substitutes' as demand for chocolate in developing markets is elastic. Therefore a price increase in chocolate will lower total revenue and a decrease in price will raise total revenue for the chocolate market. They are price sensitive. * Developed regions however high a higher level of disposable income and are less likely to substitute chocolate if the price increases, therefore demand is in-elastic and in some cases demand for chocolate actually rises in times of economic un-certainty as a source of comfort eating. ...read more.

Middle

8. The duty free channel represents a lucrative window for chocolate companies. Key players in the confectionary industry such as Mars and Nestle have responded to growing demand for chocolate in duty free shops by developing ranges of products targeted at travellers. 6.0 NEW PRODUCT DEVELOPMENT In line with trends and the external environment there has been some new product development in the chocolate market: 1. In 2002 there were numerous developments, which saw the introduction of functional ingredients to chocolate, in order to supplement its energy-giving and apparently heart healthy properties such as gurana. 2. New product development has been aimed at luxury chocolate, as suppliers seek to improve their profits in a market which has been heavily affected by increases in the prices of its principle raw materials: cocoa and sugar. 3. As the market in developed countries has reached maturity, and manufacturers are more cautious about launching new products in developing countries incase they fail, they have reverted to 'safe' new product development has consisted of line extensions, and limited editions of existing lines. However the policy of safe launches has been partially forced on manufacturers as a result of the growing strength of large retail chains, which are forcing prices downwards, and stifling innovation. Grocery multipliers prefer to rely on established 'super brands' which are popular enough to sell multi-packs, and are more likely to provide shelf space for a new product if it is associated with a major brand 4. A recent new product development was miniature twist wrappers mentioned in the previous section, such as Mars Celebrations, and Cadbury's Heroes which proved popular in the developed world, where focus has been on adult snack sharing and in developing regions, where the miniature chocolate sweets due to their size represent a more economical purchase 7.0 MACRO-ENVIORNMENT This includes all factors that can influence an organisation, but that are outside of their control. ...read more.

Conclusion

This was a very detailed report on the confectionary industry, and provided some interesting insights into the market and its environment with useful facts and statistical data. The paper was however limited and lacked validity, by the fact that the data only covered the time period 2003-2008. Mintel Reports http://reports.mintel.com/ This provided information on the chocolate confectionary industry from November 2004, which again provided some useful facts and figures about the industry, but again the paper was limited in validity as it only covered the chocolate market in the UK and as I was looking at the global market, it provided only limited information. Websites Oxfam http://www.oxfam.org.uk/what_we_do/fairtrade/why_ft.htm The website went into detail about the formation of fair trade, what it stood for and what are its aims in the future. Fair Trade http://www.fairtrade.net/sites/impact/facts.html The website provided statistical information on the charity and how the market has grown Guardian http://www.guardian.co.uk/fairtrade/story/0,,848191,00.html The Guardian archives provided an interesting article on the exploitation of cocoa-farmers in Africa Marketing Teacher http://www.marketingteacher.com/Lessons/lesson_marketing_environment.hm Provided an explanation of marketing concepts and provided useful diagrams that could be used for reference Lindane http://www.pan-uk.org/banlindane/lindchoc.htm This was an article published about the over use of pesticides in cocoa-farming Text Books Principles of Marketing, Brassington, F and Pettitt, S, 3rd edition 2003, Prentice Hall This book provided me with an overview on the principles of marketing, with interesting relevant case studies about the chocolate market. I found the book extremely useful in understanding marketing models. The Business Environment, Worthington, I and Britton, C, 4th edition 2003, Prentice Hall This book was a good reference in understanding the external marketing environment, and the factors that affect it. It was clearly laid out, and had good use of example to aid your understanding of the concepts. International Marketing Strategy, Doole, I., Lowe, R., (1997) "Contemporary Readings", International Thompson Business Press The book was a good reference for understanding the marketing strategies of international companies and how they must operate in international environments in order to remain competitive 2 ...read more.

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