Situation Analysis

  • Category:
    Marketing
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    Assignment
  • Level:
    Undergraduate
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SITUATION ANALYSIS 10

Situation Analysis: Canberra Black Forest Chocolate café

Situation Analysis: Canberra Black Forest Chocolate café

Introduction

The Australian chocolate market has experienced remarkable growth in the past few years. In 2015, more than 52% of the Australians ate chocolate bar which was a significant growth compared to 2013 where only 48% of Australians consumed chocolate (Roy Morgan, 2016). The growth experienced in the Australian chocolate market makes the market lucrative for doing business. Canberra Black Forest Chocolate café is one such company that has identified the opportunity available in the Australian chocolate market and intends to open a chocolate café in Canberra. This situational analysis investigates the Australian chocolate market and analyzes the internal and external environmental factors that might affect the operation of Canberra Black Forest Chocolate café’s operation.

Industry Overview

The Australian chocolate market has experienced immense growth in the past few years. In 2013, the Australian chocolate market was valued at US$2.45 with a spending per capita of US$142.37 (Business Wire, 2015). However, the market has experienced remarkable growth since 2013 considering that the majority of Australians are making chocolate eating part of their culture. In fact, studies show that a significant proportion of Australians currently consider themselves chocoholics while a section also sees themselves as connoisseurs. The growing Australian chocolate market is indicated by a recent study that found that between 2013 and 2015, Australians aged 14 years and above consumed chocolate at least once per month. The growth in chocolate eating habit is recorded across all the chocolate bars, blocks and boxes of chocolate. In 2015, at least 52% of Aussies ate a chocolate bar at least once a month, marking about 4% growth compared to 2013 where only 48% consumed chocolate (Roy Morgan, 2016). Overall, the chocolate consumption among Aussie men grew to 66% up from 62% compared to 2013 while that of women grew from 69% to 72% during the same period (Langley, 2014).

Situation Analysis

Source: Roy Morgan (2016).

Although the Australian chocolate industry has experienced immense growth between 2013 and 2015 at an average of 4%, the growth is projected to slow down from 2015 to 2020 to just 1%. The slowdown in growth is expected to be driven by a number of factors that include consumers embracing portion control, looming shortage in cocoa, persistent reduction in tablet sizes, weakening Australian dollar that is expected to drive up premium import prices. The industry currently has 356 businesses and employs about 11,733 people (IBIS World, 2016).

External Environment

Political Factors

The operation of Canberra Black Forest Chocolate café will be greatly affected by the Australia’s political environment. The political stability enjoyed in Australia will favor the operation of Canberra Black Forest Chocolate café. However, any move by the government to increase taxes on chocolates would result in increase prices for chocolates that would in turn result in a reduction in the number of customers willing to buy chocolates (Allen, 2010). Because obesity and heart diseases are serious problems in Australia, the government is considering tightening laws on food, such as chocolate firm and this is likely to affect chocolate consumption, thus resulting in decreased sales (Jolly, 2011).

Economic Factors

The success of Canberra Black Forest Chocolate café will be affected greatly by the economic status of Australia. The current state of Australia n economy favors the growth of Canberra Black Forest Chocolate café. In 2015, the Australian economy grew by 3.1% compared to 3% in 2014. In the first quarter of 2016, the country’s economy expanded by 1.1% (Reserve Bank of Australia, 2016). The growth of Australia’s economy means increase in disposable income among Australian consumers, which means good business opportunity for Canberra Black Forest Chocolate café. Besides, Australia is a middle-income economy, which means that the majority have enough disposable income to buy chocolate. However, economic issues, such as a sudden slump in economic growth in the future, coupled with rising interest rates and inflation could result in decreased consumer purchasing power that would affect the performance of Canberra Black Forest Chocolate café.

Social Factors

Social factors will have a huge impact on the performance of Canberra Black Forest Chocolate café. First, the fact that Australia’s population ages very fast is likely to impact negatively on the growth of Australian chocolate market considering that most chocolates are consumed by teenagers and young adults. Secondly, the changing consumer needs, preferences and lifestyles is also likely to affect the growth of chocolate industry (IBIS World, 2016). Most Australians are increasingly becoming health conscious because of the increasing cases of obesity and related health and this is likely to affect the consumption and sales of chocolate in the near future.

Technological factors

Technological factors have a huge effect on the chocolate manufacturing and sales and will impact Canberra Black Forest Chocolate café. For instance, the emergence of new brewing machines for coffee and cocoa blending will affect the technology that the company uses in production of its chocolate (Culliney, 2012). Additionally, as most Australian consumers increasingly prefer to shop online, this implies that the Canberra Black Forest Chocolate café might be forced to introduce online sales. Moreover, the increased development of new communication tools, such as social media implies that the company will have to adopt these technologies in marketing its products (Culliney, 2012).

Environmental Factors

Australia is one of the signatories to the Kyoto Protocol and the Copenhagen Agreements on climate change. In response, the Australian government has enacted laws on climate change that the Canberra Black Forest Chocolate café will have to comply with to operate in the country.

Legal Factors

The operation of Canberra Black Forest Chocolate café will be affected by a number of laws, which include consumer protection laws that requires food manufacturers and retailers to ensure that their products are clearly labeled. Additionally, the employment laws in Australian food market, such as the minimum wage rates, and the number of working hours will greatly affect Canberra Black Forest Chocolate café’s operation.

Competitor Analysis

The Australian chocolate industry is highly competitive (Business Wire, 2015). The industry has a high number of well-established chocolate companies that Canberra Black Forest Chocolate will have to compete with for the market share. Most of these competitors have positioned themselves as healthy, cost effective brands. The major competitors that Canberra Black Forest Chocolate café will compete with include Nestle, Mondelez, Lindt, Cudbury and Mars. Others are Kit Kat, Snickers and Cherry (Nieburg, 2016).

Customer Analysis

Chocolate is a luxury and convenient product that appeals mainly to the middle-class customers. Nevertheless, the principal market for chocolate is teenagers and young adults between the age of 14-45 years living in the urban centers. According to the Langley (2014), about 40% (7.7 million) Australians aged 14 years and older consumed at least a single piece of chocolate bar per week in 2013 (Roy Morgan, 2016).

Therefore, considering the segment of the demographic of the population that consumes large amount of chocolate, consumers aged between 14 and 45 years would be the suitable target market for Canberra Black Forest Chocolate café. The second target market will be men and women. According to Wood (2013) study, both men and women alike consumed large amounts of chocolate. For instance, the chocolate consumption among Aussie men grew to 66% up from 62% compared to 2013 while that of women grew from 69% to 72% during the same period (Roy Morgan, 2016). This makes both genders a suitable target market for Canberra Black Forest Chocolate café. The other target market for Canberra Black Forest Chocolate café will be urban residents, which forms the largest consumers of chocolate in Australia. For this reason, the Canberra Black Forest Chocolate café will be opened in Canberra to be able to make the chocolate easily accessible to the city residents.

SWOT Analysis

Strengths

  • Strong and experienced leadership

  • Highly skilled staff

  • Strong innovation

  • State-of-the-art café

Weaknesses

  • Weak brand awareness as the café is new

  • Lack of proper knowledge about the Australian chocolate market

Opportunities

  • Growing demand for chocolate in Australia

  • Favorable business environment

  • High competition

  • Rising cost of cocoa

  • Growing number of health conscious consumers

References

Allen, L. L. (2010). Chocolate Fortunes: The battle for the hearts, minds, and wallets of China’s consumers. New York, NY: AMACOM Div American Mgmt Assn.

Business Wire. (2015). Research and markets: Confectionery market in Australia — Chocolate is the largest category by value and volume sales and will register fastest growth during 2009-2019. Retrieved from http://www.businesswire.com/news/home/20150813005417/en/Research-Markets-Confectionery-Market-Australia—Chocolate

Culliney, K. (2012). Tasty innovation ensures resilience in cash-strapped, health-conscious Australia. Retrieved from http://www.confectionerynews.com/Markets/Tasty-innovation-ensures-resilience-in-cash-strapped-health-conscious-Australia

IBIS World. (2016). Chocolate and confectionery manufacturing in Australia: Market research report. Retrieved from http://www.ibisworld.com.au/industry/default.aspx?indid=110

Jolly, R. (2011). Marketing obesity? Junk food, advertising and kids. Retrieved from http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1011/11rp09

Langley, S. (2014). The battle of the chocolate blocks: Lindt gaining popularity over Cadbury in Australia. Retrieved from http://ausfoodnews.com.au/2014/06/11/the-battle-of-the-chocolate-blocks-lindt-gaining-popularity-over-cadbury-in-australia.html

Nieburg, O. (2016). Mondelez, Nestle, Mars and Lindt pledge to use sustainable cocoa for Australian-made chocolate. Retrieved from http://www.confectionerynews.com/Markets/Australia-s-top-chocolate-makers-commit-to-sustainable-cocoa

Reserve Bank of Australia. (2016). Australian economy snapshot. Retrieved from http://www.rba.gov.au/snapshots/economy-snapshot/

Roy Morgan. (2016). More Aussies chomping on chocolate. Retrieved from http://www.roymorgan.com/findings/more-aussies-chomping-on-chocolate-201603212333

Wood, L. (2013). Confectionery market in Australia — Chocolate is the largest category by value and volume sales and will register fastest growth during 2009-2019. Retrieved from http://www.barchart.com/headlines/story/10107789/confectionery-market-in-australia-chocolate-is-the-largest-category-by-value-and-volume-sales-and-will-register-fastest-growth-during-2009-2019