Cocoa delights assessment

2 - Case Study.pdf
CASE STUDY

Part 1

You are the Marketing Manager for ‘Cocoa Delights’, a chain of 15 gourmet dark chocolate stores in Melbourne,

specialising in creating handmade dark chocolate products. The organisation is close to reaching its set goals and

looking to activate the next phase in its development. The CEO has asked you to undertake an organisational review.

To help you get started, the CEO has provided you with:

 The Cocoa Delights marketing plan (December 2018)

 An excerpt of the annual report by the Chair (December 2018)

 A subsequent interview

 The latest report for the industry.

You review the annual report and note the following statement by the Chair of the Board.

Within the next 5 years, Cocoa Delights will become a national retail brand that satisfies our customers with a range

of unique, high quality dark chocolate, as well as providing exceptional customer service from our highly skilled and

dedicated staff.

At the time of the annual report, the Chair of the Board was interviewed by a reporter who made the recording

available on their website. You watch and listen to the interview and hear the following statements by the Chair of the

Board.

Cocoa Delights has always been daring and unconventional. Creativity and innovation have always been our strength

and the cornerstone of our success. For our stakeholders, we have always been about stewardship and adhering to

professional and moral standards of conduct in all that we do. For employees, we are committed to encouraging self-

directed teams; we cultivate leadership and maintain high levels of safety. Externally, we are committed to sustainable

environmental practices and offering meaningful value to our customers.

By 2023, I see Cocoa Delights as being a significant retail presence in every Australian capital city, starting with 22

stores in the greater Melbourne area and growing to 100 stores Australia wide.

Our market strength is our ability to source the finest cocoa beans at prices that customers believe represent value for

them but also provide the organisation with the required margins and financial returns.

During your interview with the CEO, you ask about the changes taking place in legislation that could impact on Cocoa

Delight’s operation. The CEO explains:

There is a big push by governments on the issue of sustainability. This focuses mostly on the environmental issues of

waste management and energy conservation. In the past, Cocoa Delights stores have been deliberately designed to be

bright and comfortable places to shop. This meant a significant cost in electricity usage to run the lights and air-

conditioners. With the new laws, we are going to have to find ways to provide customers with what they want, without

the high electricity usage.

Another issue that the government is looking at is having the country of manufacture clearly stated on imported

products, although at present the government is allowing the industry to self-regulate rather than pass laws. Cocoa

Delights has always practiced this activity and is proud to be Australian made. We see this as an opportunity to increase

our market- share, as some of our competitors are selling chocolate products that are imported from countries with a

poor reputation for quality and employment ethics.

You then ask about the new phase in the strategic plan, which the CEO describes as a big step:

We now need to change our focus from local suppliers of services to national ones, and to think about opportunities

to save money by gaining a wider geographic benefit and choosing media with a national reach.

When asked about the current marketing plan against actual results for the year, the CEO reports:

We achieved our store growth and sales growth but our gross profit margins are currently sitting on 46%. I think we

are still below the threshold for gourmet chocolate and hot drinks, which we predict should be at an average gross

profit of 63%. Expansion in sales and cost effectiveness are key issues here. We have spent $60,000 on radio

advertising and $280,000 overall, including PR, magazines and direct marketing. While this radio advertising

expenditure achieved sales results, it was at a significant cost that was not initially planned for. PR has been particularly

useful, resulting in many write-ups on our unique offer.

The customer loyalty lists had achieved a total of 34,500 and a survey indicates that 58% of people in the target market

recognise the Cocoa Delights brand and what it represents.

Overall, our SWOT analysis in 2018 is still valid for today. Not much has changed in that regard.

Studying the latest report for the industry, you note the following differences between Cocoa Delights’ marketing plan

from 2018 and their current situation.

 Interest rates are in fact rising.

 Unemployment has also risen to 5.8%.