MBA Marketing Assignment - Colonial Candles

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MBA

MARKETING ASSIGNMENT

By

Jonathan Simpson


Contents

Word Count: 4423


Executive Summary

The Colonial Candles marketing strategy for 2000 seeks to generate a significant increase in company sales and profits over the preceding years.  The profit target for 2000 is set at £0.3 million.  The sales-revenue target is set at £1.4 million, which represents a 100 percent profits increase over last year.  This increase is seen as attainable through an expanded product range, and improved pricing, advertising, and distribution strategies.  The required marketing budget will be £0.1 million., a  625% increase over the previous year.  This increase in marketing expenditure is necessary to support maximum penetration into the identified target markets based on market research conducted and to overcome entry barriers and competition.  A new product range, centred on the launch of the ‘safe’ scented candle aimed at the Air-care sector, will take to company forward in its move away from the now aging present range of candles.  As a company, the brand name will continue for the next 3 years to be associated with the production of the Emergency Candle, after which the product is to be phased out.  The long-term future of Colonial Candles is as a manufacturer of quality hand finished candles that will be sold direct to a variety of retailers for self-branding, and which encompasses the identified target end customers.  


Current Marketing Situation

  1. The Candle Market Today.  The current UK candle market realised sales of £116 million in 1998 (see fig 1) and this represented a 76% increase over the five-year period since 1994.  Analysis of sales in the candle market proved difficult owing to the many of designs and usages that have emerged.  The Mintel’s market intelligence report (26/04/99) of the candle industry resulted in the grouping of candle production into three principle sectors: Enhancement; Functional; Air-care.  

Fig 1.  Total Value of Candle Sales 1994-98

  1. The present sales values in these market sectors, in 1998, are £75 m (Enhancement), £29 m (Functional), and £ 12 m (Air-care), (see fig 2).  

Fig 2.  Candle Sector Sales for 1998

  1. Breakdown of Segments  These market segments were further broken down in the Mintel report.  The sales achieved of each of these sub-sectors is illustrated in fig 3.  It should be noted that, whilst there has been considerable growth in the candle market, Emergency Candles (sub-sector of Functional Candles) has experienced a marked decrease in revenue over the same period.  

Fig 3.  UK Retail Sales of Candles, by type, 1994-98

  1. Demand and Supply Forces  In recent years, the  ‘pushing and pulling’ effect of supply and demand forces acting within the market has created the explosive growth.  This is illustrated in figures 1 and 2.  The ‘push’ is due to a large increase in the number of candle producers, together with an increased range of retail outlets expanding the available distribution base.  The ‘pull’ has been generated by an increase in the end consumer demand, which has generally reflected changes in lifestyle and fashion.  Candles are no longer just a primary source of heat and light, they have become ornamental and decorative.  Most of the manufacturers are now focusing on producing candles for the enhancement sector.  Additionally there has been the emergence of the Air-care sector, which is presently dominated by the products, Glade and Haze (main competitors in this sector).  Based on the candle format, this sector has seen an increase of 500% over the five-year period to 1998 (see fig 4).  

Fig 4.  Air-care Sales 1994-98

  1. Market Future Growth   The growth of the candle market is not expected to last, with the latest analysis concluding that the market is suffering from the first signs of ‘maturity’ (demand remains steady, displaying neither a marked increase or decline over a period of time).  The growth rate between 1996 and 1997 stood at 14% compared with the previous year’s 15%.  However, Mintel’s report evaluation of the candle industry is one which views a market place about to enter a period of ‘maturity’, with only a potential for considerable growth being predicted to last until the end of 2001.

Data Restrictions and Assumptions

  1. When compiling this report it was necessary to restrict the data used in the following ways:

  1. Only data from the Mintel Marketing Intelligence Report (Candles 26/04/99) and the interview conducted with Donald and Sam Bendall of Colonial Candles was used.

  1. The research conducted into the ‘safe scented candle’ is exclusively the property of Colonial Candles.

  1. That only the UK market is being considered.

  1. That the market for candles can be said to be largely seasonal (Mintel Report identifies that Price’s realised 75% of their turnover in the 3 months leading up to Christmas), similar to that of fireworks or Christmas crackers.

  1. In the absence of a complete set of financial figures for all aspects of the production and marketing of the candles, financial figures will not be included in this report.  

  1. Any costs associated with the development of the safe scented candle with the University have already been dealt with.

  1. Accounts of business-to-business sales will provide a degree of stability to the cash flow of the company.


SWOT

Opportunity and Issues Analysis (External/Internal)


  1. The main opportunities facing Colonial Candles

  1. Candles are no longer viewed as an item to be used in an emergency but more as an enhancement to a lifestyle.

  1. The candle market is continuing to grow and is predicted to do so until the end of 2001.  Sectors with the greatest growth are the Air-care and Enhancement.

  1. Lifestyle and fashion changes have resulted in increased demand for candles that provide a perceived enhancement to the consumer.  

  1. Although the brand name is weak, the key to market success is not brand awareness but market penetration through wide-scale distribution.  

  1. Candles are a homogenous product.  Present market research suggests that end consumers display little or no loyalty to a particular brand.
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  1. End consumer quality perception is derived from their quality perception of the distributor at time of retail.

  1. A British Standard does not presently govern the safety of Air-care candles.  The current market products manufactured by competitors in this sector, Glade and Haze, burn at higher temperatures.  Colonial have developed a candle that burns more stably at a low temperature.  The candle will be safer.

  1. The main threats facing Colonial Candles

  1. A large number of competitors exist in the candle market, offering a variety of products.  Intense competition has eroded away ...

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