Rogers Chocolates
Rogers Chocolates has been in the market for several years now, since the year 1885. This company has had a lot of successes as well as challenges since its establishment. As indicated, one of the greatest challenges is how to counter the high competition from other chocolate producers. Several companies have come up over the years, mostly specializing in the production of premium chocolate.
Competition has therefore been experienced in many fronts. For instance, some of the companies in this industry have come up with high quality products but at prices lower than those of Rodgers. These among many other issues are what pose challenges to Rogers Chocolates. This study has a particular interest in Rogers Chocolates. It seeks to understand, based on a SWOT analysis, the future prospects of this company. It further seeks to probe the key resource strengths and weaknesses, as well as the competitive capabilities of the company. Due to the highly competitive nature of this industry, this study will also take a look at the competitive strategies of Rogers Chocolates and its relative position in the industry. It will further give a detailed proposal of which strategic options available to Rogers Chocolates should be given the highest priority.
Competition in the Premium Chocolate Industry
The situation in the chocolate market was that, premium chocolates were in greater demand compared with the low quality chocolates. This was partly because of the coming of age of the baby boomers, keen on quality as well as brand whenever they made their purchases. The demand for this product is highest during the Christmas festivities, roughly eight weeks to Christmas (Rogers Chocolates, 2007). This accounts for over one quarter of the annual chocolate sales. It is important to keep in mind the fact that the target market does, in many ways, contribute to the competitiveness of a product. Due to the changing social trends, consumers were increasingly asking for healthier products, thus the need for organic chocolates was also on the increase (Thompson et al., 2004). Consumers were also shifting their interest from milk chocolate to dark chocolate, arguably due to its anti-oxidant properties, which were considered important for the maintenance of healthy hearts. With this background information, it is easy to see that players in the market had a challenging journey ahead of them.
One of the main challenges to the players in the industry is whether to maintain their traditional brands or adjust according to the changing tastes of the consumers. For instance, Rogers had a tradition of making and packaging its products by hand. Some of the players entering the market, for instance Godiva, came up with very lovely packaging styles, which greatly boosted their sales (Thompson et al., 2004). Most of the brands that were competing in the market had strong establishment in the region. The competitors were few, but with very well established structures. For instance, Godiva had a well established distribution system. Three strategies were particularly the key influencing factors in the rise of this companys price points. These were the unique packaging style, its aggressive distribution strategy, and the strong advertising campaign. This was a major challenge to Rogers Chocolates because even though its products were of higher quality, Godiva managed to move fifteen percent higher in terms of price points.
Other companies were also coming up. For instance, Bernard Callebaut took on locations similar to that of Rogers (Thompson et al., 2004). Worth noting is the fact that Rogers had very strategic locations mainly tourist areas and downtown retail centers. Bernard Callebaut also introduced new flavors into the market something that proved challenging to Rogers Chocolates. Both quality and packaging were also excellent for this company. Within no time, this companys sales matched those of Godiva, but their strategy was mainly retailing.
Other companies that competed with Rogers for the market included, Lindt, a Swiss company, which was also very well established. This company offered a very wide range of chocolates with a very wide distribution mechanism. The price points for this company were about ten percent less than those of Rogers. However, it still did quite well.
Purdys was also another major competitor in the market. This company was Vancouver based. With over fifty locations, Purdys had been on a very successful trend. This company had lower price points compared to Rogers, but its chocolates were of considerably high quality.
There were as well, smaller companies that dealt with premium chocolates in Canada. These companies specialized in a variety of products, with a number of them specifically dealing with custom orders, and organic chocolates (Thompson et al., 2004).
The strongest competitive force seems to be the rivalry that persisted among the existing companies. This was so strong that each company had to keep reinventing itself or risk loosing the market. The supplier power does not seem to have been a big threat among these companies. Therefore, this seems as the weakest of the competitive forces.
Although the tourist arrival from the United States went down, the coming of age of the baby boomers is one of the most attractive forces. This is because this group of people came with a great promise of purchasing power. Each company establishes with the hope that its products would find the right market and break even. This means the presence of potential buyers is the most attractive force to new entrants.
Changes in the Premium Chocolate Industry
As earlier indicated, a lot has been happening in this industry in terms of consumer demands and tastes. One of the key drivers of change therefore, is the changing consumer demands. There has been an increasing awareness of the need for a healthy living. The chocolate industry is no exception. This has had a great influence on what is made. For instance, in North America, there had been a great demand for milk chocolates. However, since the healthy living campaign, there has been a paradigm shift to dark chocolates (Thompson et al., 2004).
There has been a shift from the demand for low quality chocolates to the premium chocolates. This had been occasioned by the improved purchasing power. The baby boomers had a greater purchasing power, due to a better economy. At the same time, the old loyal customers had been slowly diminishing, leaving the companies in need of new customers. This meant that the companies had to adjust according to the tastes of these new customers. The choices for the chocolate companies, Rogers in particular, were very limited. They had the option of maintaining their traditional way of making chocolates while risking customer loyalty, or readjusting to the present reality in order to capture the new market demands.
The most powerful driver of change is the consumer needs. This is because if the needs of the consumers are not met in the product, there is no possibility of that product selling. If the need is met in the use of the product, there is a great possibility of creating customer loyalty. This seems to have been a very strong force, which can solely bring about change. When the tastes of the consumers change, the products must change as well. When the consumers got an increased awareness of the need for a healthy living, there was a radical shift from the need for milk chocolate to dark chocolate. Therefore players in the market ought to be very aware of this reality.
Factors Determining the Success of Premium Chocolates Producers
In order to succeed in the premium chocolate business, one has to put into consideration several factors. These must necessarily be present if success is to be realized. These factors include
Quality- the quality of the chocolate must be such that it fits the needs of the consumers. For instance, for a long time, Rogers had a consumer base that preferred the traditional way of producing and packaging. However, as this clientele decreased, it became apparent that the new generation was interested in something different. This meant that there had to be an adjustment in terms of quality. It is important therefore, to understand the needs of the people for whom these products are made.
Advertising- for any premium chocolate producer to succeed there must be proper advertising. This is the only way that these products can get popularized. It is very crucial therefore, that a careful selection be made, of the means in which this advertising is done. This has to be in line with the demands and location of consumers. It also means that the producers have to conduct the necessary study to establish the exact need of the target groups.
Distribution- this is the key to the success of any product. If the premium chocolate business is to succeed, the choice of distribution system has to be very well thought out. For instance, due to its well planned distribution, Godiva Company managed to surpass the price points of Rogers by over fifteen percent. It is very important therefore to carefully select the locations to distribute these products.
Packaging- the way a chocolate is presented determines to a very large extent, whether a buyer is going to make the move or not. Therefore it is extremely important to package the products in a way that is likely to capture the attention of the buyers. This goes a long way in the establishment of a customer base, because packaging can also give a particular identity to the buyer.
Location- premium chocolates are a bit more expensive compared to the low quality chocolates. It is important to carefully select the location of the manufacturing firms, relative to the source of raw materials. This can greatly reduce the production costs, which eventually translates into profits. The choice of the location should also be in consideration of the existing laws and regulations. This is because these regulations can affect profitability, where the tax regime is unfriendly.
A SWOT Analysis of Rogers Chocolates
An analysis of the Rogers Chocolates revealed that this company had some strengths which if properly analyzed could translate into benefits for the company. The competency of the new president was for instance a very important strength for Rogers Chocolates. The board of directors had realized the importance of having a competent president, which is the reason why they took a lot of time recruiting a new one. The new presidents empowering style and personal integrity were likely to serve the company a great deal. The move to have the new president purchase shares in the company was a very wise move, because once the president understands that his own investment is at stake, he would be more likely to put extra effort in order to ensure its success.
The fact that Rogers Chocolates made a lot of use of the World Wide Web in conducting its business is a great advantage. The young people comprised the greatest percentage of users of the internet, and this had already translated to success for the company. It is estimated that over forty four percent of customers who shopped online were young people, while about twenty percent were between the age of thirty five and fifty four. This variation is quite remarkable. It means that the company stood a great chance with this new breed of consumers. The company had understood that in the modern times, one has to go to the clients in order to make sales. The internet is a very good place to meet the clients, and this company has a lot of potential in this regard. It also served to reduce costs, because it eliminated the need for intermediaries. Over ten percent of the companys total sales were generated from orders made online or through mail orders. This was clearly an important area of strength for the company (Thompson et al., 2004). Considering that the world is still advancing technologically, this seems like an opportunity for the company to reassert itself as a giant in the chocolates industry. The new president seems to share in this opinion, which is a very important step for the companys future. It is important therefore, that the company invests more in developing its image and domain on the web. This is important if it is to override the stiff competition it seems to be facing.
The company did not depend on only one source of revenue. It had four major sources, namely wholesaling, retailing, onlinemail orders, as well income from Sams Deli (Thompson et al., 2004). This was a major point of strength for the company because there was a possibility of profitability in the future due to the diverse sources of revenue. The retail business was in particular a great source of the companys success, accounting for more than fifty percent of its total sales. The strategic positioning of these stores was one thing that worked to the companys advantage. This was greatly boosted by the award it won in the year 2000, from the Retail Council of Canada. This positive image greatly boosted the companys sales because, as indicated, most of the stores in Victoria were capable of selling anything, thanks to the positive brand image. However, the company should urgently do something about the position of the Granville Island store, because its location (near a refuse bin) seemed to have been affecting sales.
Another advantage for the company was that it had already established itself internationally. This was an important asset for Rogers Chocolates because this was a factor that promoted its wide use of the internet as a means of diversification (Thompson et al., 2004). Although the number of tourists had declined, the company still had a chance, because its quality products had already been popularized among the Americans, who formed a great majority of its customers. Therefore the option of taking the products to them should be explored further. With the rapid globalization that has been taking place, taking these products to various destinations should not pose a major challenge to the company. It has been proven to work in previous situations and as such should work in this case.
A major boost for the company was the Superior Taste Award in the year 2006. This was awarded by the International Taste and Quality Institute (ITQI) (Thompson et al., 2004). In the statement following the award, the company was considered the best, with products that were considered top of the range. This is likely to serve it well for several years to come.
Sams Deli seemed to have been unable to meet the expectations of the managers (Thompson et al., 2004). This restaurant offered quite a number of products, but it had not been able to match its potential. A major challenge with regard to this business was that of replacement of retiring staff. This is perhaps one of the reasons why this particular enterprise did not live up to the expectations of the company. This is a competitive liability to the company. However, it still remains an important establishment for the company. It is important therefore, that the companys management consider seeking replacements elsewhere if doing so is likely to promote the companys future.
Although the high cost of Rogerss products may have been a competitive strategy, it is possible that this worked to the companys disadvantage. This is because the products were only available to the affluent persons. Those in the middle class, who tend to form the great majority, did not have this luxury. It is common knowledge that when something is relatively cheaper, the sales may be much more due to the affordability. It has been argued that most of the people that bought these products were the already established customers. Those who heard of the product for the first time were reluctant or totally unwilling to try, mainly due to the premium prices charged on the products. It was found out that some of the wholesalers were scared away by these prices. One thing that is very clear is that for a company to grow, it has to be widely known. However, if this is threatened by the high prices, it means that there is a high likelihood of the company losing in the future. The management was torn between developing a cheaper product and discounting the existing products. Both of these had their own consequences. What was at stake in both of these cases was brand integrity. In other words, it was not clear how to do either of these things without necessarily compromising brand integrity.
The packaging style of Rogers Chocolates products seems to have given competitors an edge over the company. This is because their products were still hand packed, which did not appeal too much to the new breed of consumers. As already mentioned, competing companies had already noticed this and taken advantage of it. The company was still struggling with the decision on whether to change the packaging or to retain it. The longer this takes, the greater the possibility of losing potential customers. It is worth noting that, the new customers seemed to be looking for elegance. That is why the packaging mattered for them. The company must therefore look into this otherwise the future is not very promising.
Another major weakness for the company was its incapacity to invest in the production of organic chocolates (Thompson et al., 2004). It had become evident that a great majority of the potential consumers had been demanding for these products, mainly for health reasons. As aforementioned, Rogers Chocolates operated among other giants in the area. This meant that there was a possibility of the competitors taking advantage of this weakness and take away the would be customers. This was a major threat because the awareness of the need for healthy living had been on the increase. This meant that if the company was to stay relevant, it had to offer what the consumers asked for. At the same time, those who used to be the traditionally loyal customers had already passed on, meaning that their places had to be taken by new customers. These new customers comprised of young people, who came with new tastes and demands. This was a major challenge for the companys future.
For a company to have sustainable sales, demand forecasting is crucial. This helps the company to determine how much should be produced relative to the demand at particular times. If this is lacking, the company is likely to experience reduced sales. Rogers Chocolates seemed to suffer from a problem of demand forecasting (Thompson et al., 2004). This was brought about by the seasonal nature of the demand for the products. The company only made use of monthly sales forecast, which was insufficient, considering the nature of their products. If the future of this company was to be a bright one, there had to be a better developed forecasting system. This is an area therefore, where enough research should be conducted in order to develop a system of demand forecasting. It may be helpful to investigate the systems competitors used for this purpose. This would at least keep the company at par with others in the market.
Rogers Chocolate depended largely on a Chinese supplier for its packaging tins. Unfortunately the packaging was not always done in a timely manner, due to technical difficulties on the part of the supplier. This had been largely blamed on the constant electricity failure. What this meant to Rogers Chocolates in terms of sales was that profits reduced, because there was no possibility of selling without packaging the products. It was evident that sometimes production could not remain on schedule due to the constant problems with the supply of raw materials. It is needless to say that if a customer was looking for a particular product and fails to find it, they would most likely go for the next best alternative. If they discovered that the quality of the alternative was not that different from what they are used to, they would likely develop loyalty for that product. It means that the company may have been losing a lot of customers due to this problem. It is important therefore that, if the company was to remain successful, such delays be taken care of.
Another point of weakness in the company was the internal dissention that was taking place during the time. When there are disagreements within the top ranks, the challenge is that of maintaining the company at its productive levels. For instance when the marketing department fights with the production department, it means that there will be no coordination. This can very easily bring the company to its knees. The management must work together, because despite the fact that there is a president who is competent, the managers around him can easily bring down his efforts, making him to appear incompetent.
Although there were over five competitors, two are of particular concern, because they seem to have been at the neck of Rogers Chocolates. These are Godiva and Bernard Callebaut. These two seemed to be the most unrelenting external threats to Rogers Chocolates (Thompson et al., 2004). They had managed to capitalize on the weaknesses of Rogers and reaped great benefits. For this company to survive the onslaught of the various competitors, it must realize that the customer has always been on the right, meaning that if their demand is for a designer packaging, then that must be offered. This company had for a long time struggled with this decision, it is for this reason that the company should no longer deliberate on the issue. A decision should, albeit must be made, because this is a fact that exposed this company to a very major threat.
Rogers Chocolates Competitive Strategies
One very important thing to the consumers is a rational justification of the prices offered. This means that if prices of commodities are too high, the producers must rationally justify it. On the other hand, if the prices are too low, the producer must be in a position to justify it as well. In other words, the value for money paid is the most rational justification. A look into Rogers Chocolates revealed that the company had some unique competitive strategies, which had been used over the years to bring the company to its status. Four of these strategies are of interest to this study. These include
Differentiation- in this strategy, the company looks at the criteria that buyers use when choosing whatever they buy. The company then moves in an attempt to meet those particular criteria. Under normal circumstances, a higher premium is charged for a product. The reason for this is that the product is considered to be of a higher value compared to the rest in the market. This means that the amount above what is considered normal is meant to take care of the cost of production. In other words, the product is set apart (differentiated) from the rest, due to its unique value in the market. Rogers products were considered to be of very high quality (Thompson et al., 2004). As a matter of fact, it was the companys policy that the products were specifically designed for the affluent in society. Whenever people bought Rogers products, they were aware of the fact that they were buying the best in the market, thus enjoying the value for their money. This was one of their competitive strategies. However, it is important to put in mind the fact that this strategy may not have always worked to the companys advantage, because there are other companies that had remained very competitive in the market.
Cost Leadership- this means that a company is the one that leads in as far as producing at the lowest cost is concerned. There is a particular emphasis laid on the need to cut down on the costs of producing the various goods. Ideally, this strategy assumes that if a company produces at a lower cost and sells at the same price with the other players in the market, then it is likely to be the company that makes the highest profit. Being a private company, Rogers had concentrated its efforts in reducing cost of production. In particular, the taxable income was what the company sought to reduce. In line with this strategy Rogers Chocolates made a decision to offer discounts to the corporate customers (Thompson et al., 2004). This meant that there was a possibility of increased sales at no extra cost.
However, it is important to note that there are many other factors to consider when looking at this strategy, because the fact that the company produced at a lower cost does not necessarily guarantee a competitive edge. This is because in order to be competitive, there other factors as well, which come to play in order to remain competitive. This strategy is just one among many others, which should all be applied concomitantly in order for a company to remain competitive. Rogers Chocolate is not in a position to explain whether the profitability that it enjoyed was purely due to this strategy. However, it is evident that this strategy was one of the contributing factors to its competitive advantage.
Differentiation Focus- this strategy basically involves a company targeting a particular market. This means that a specific category of customers is sought after. This is informed by the understanding that every individual comes with their own unique needs. The company seeks therefore to satisfy this particular need. In most cases, this particular category of people is the affluent. The product offered must satisfy the needs that have not been satisfied by other products of similar nature in the market. Although Rogers produced a variety of products, some of those products, chocolates to be specific, were specifically meant for the people who were in search of a kind of distinction (Thompson et al., 2004). These products came in handy for those who were interested in special gifts for their loved ones. A gift that was hand wrapped and hand made was surely a special and unique gift. Although the chocolates industry had very many competitors, there was no other company that offered a combination of both quality and uniqueness as did Rogers Chocolates. This was particularly the reason why the company was struggling with the decision on whether to change the packaging style or not. This uniqueness is known across the world, and if anyone wishes to buy a chocolate gift pack, there is this option, that is, high quality chocolate with a unique packaging, but at a slightly higher price of course.
Diversification- Rogers Chocolate was involved in a variety of products. The reason for this was not only to maximize profits, but also to provide a cushion in case of slow down in sales for one product. If it specialized in only one product, such an eventuality would mean a possible close down. While most of the competitors dealt predominantly in the production of chocolates, Rogers produced several other products. At the same time, the company did hold its own retail outlets which served to bring in over fifty percent of its total sales (Thompson et al., 2004). This was a very important strategy because besides having other retailers stock their products for them, the company did its own stocking with very unique and attractive display systems. These could only be done when the company controlled these retail outlets. This was an important step by the management of Rogers Chocolates because it did serve the company very well at a time when the returns in the industry were experiencing a decline.
Most of the companys functional strategies seem to have been consistent with its competitive strategies. For instance, the use of internet in receiving orders had been effectively developed to serve the companys competitive strategy. It was done based on the understanding that there was an increased use of this media by the potential customers. The use of the internet had been proven to provide a high rate of return for the company. The various departments had also been designed in such a way that they would ideally function as handmaids of the companys competitive strategy. However, the fact that various departments seemed not to want to function together, evidenced by the fact that various departmental heads had been engaged in some kind of conflict, shows that there was a kind of divorce between the companys competitive strategies and the functional strategy. This was very dangerous for the companys future. However, the new president offered hope that this would be put in order.
Strategic Option available to Rogers Chocolates
The question regarding the strategic option that should be given the highest priority is not a simple one, considering the nature of this market. There were a number of strategic options available to the company. The company had for instance been considering a change in its packaging style (Thompson et al., 2004). However, considering that the market was undergoing a major shift, the company should have prioritized the production of chocolates that were considered healthy for consumption. This means that although it would have been an expensive venture, the company needed to move into this direction if it was to survive. It is worth noting that the argument that it was expensive to move into this new line of production left this company with only one option, to close down. This is because the intensity with which the healthy living campaign had been preached did not leave any customer willing to risk. An interview with an old couple revealed that even the elderly who used to be traditionally loyal consumers of these products had become increasingly conscious of this reality. Although this was an option for the company, it seems like a survival option, because the company has no other option than to take up this challenge and live. Presently, people understand that living healthily is expensive but not necessarily more expensive than living unhealthily. This should have been the encouragement for the company. People were willing to spend a bit more provided they got a proportional value for what they paid. The company should put more effort to the study of the costs and the feasibility of this new market. This was perhaps the only way out for the company in the twenty first century. This option may end up overriding the demand for elegant packaging. This is because, when a product meets the needs of the consumers, it serves the most important demand. The demand for elegant packaging is only a part of the many tastes that consumers have. Most will buy a product simply because they understand it to be healthier than whatever else is available in the market.
Conclusion
The situation in the chocolate market was that premium chocolates were in greater demand compared with the low quality chocolates. Consumers were also shifting their interest from milk chocolate to dark chocolate, arguably due to its anti-oxidant properties, which were considered important for the maintenance of healthy hearts. Therefore, competition was studied putting this into consideration, because companies were very much aware of this reality. The demands and needs of the consumer are the most powerful drivers of change. This is because if the needs of the consumers are not met in the product, there is no possibility of that product making it in the market, and every producer must fight to ensure that they satisfy these demands in order to survive.
The quality of the chocolate must be such that it fits the needs of the consumers, otherwise it may end up not selling at all. For any premium chocolate producer to succeed, there must be proper advertising. This allows for the possibility of the product getting known. The manner in which a product is distributed determines to a very large extent, the success or failure of the product. Considering that there has been a change in the social consumption patterns, the manner in which packaging is done is an important aspect. Location has also been found to be an important factor contributing to the success of any producer of chocolates. This is because, for a product to attract loyalty, it must necessarily satisfy each of these criterions.
A SWOT analysis of this company revealed that the company had a lot of strengths which if properly analyzed can translate into a benefit for the company. Some of these strengths included the presence of a highly qualified president, the extensive use of the internet to take orders, the international establishment that the company already enjoyed, as well as the various prestigious awards that the company got in relation to its quality products. At the same time, the company had a number of weaknesses that ought to be taken care of in order to protect the company from losses, and possibly from collapse. The company had a major problem with replacement of retiring staff in Victoria. This should be solved by seeking replacement elsewhere in order to remain competitive.
The products or Rogers are only available to the affluent persons. This means that if this that if this particular group is no longer willing to buy, the company may end up suffering huge losses.
The packaging style of Rogers Chocolates products seems to have given competitors an edge over the company, because their products are still packed by hand, which does not appeal too much to the new breed of consumers. It is important therefore, that the company consider the option available to it in order to avert possible loss of potential customers, which is very necessary now that the companys loyal customers have turned over.
It became apparent that Rogers Chocolates was suffering from the problem of demand forecasting. The source of this problem seemed to be the seasonal nature of the demand for the products. This left the company with the option of using monthly sales forecast, which was not in any way sufficient for a company of its size. It is important therefore, to consider seriously the possibility of new methods of forecasting, especially now that technology has taken a lead role in the current world.
A look into Rogers Chocolates revealed that the company had some unique competitive strategies, which had been used over the years to bring the company to its status. Four of those strategies have been discussed. Differentiation simply meant that the product is set apart (differentiated) from the rest, due to its unique value in the market, thus the relatively higher cost. Ideally cost leadership assumes that if a company produces at a lower cost and sells at the same price with the other players in the market, then it is likely to be the company that makes the highest profit. Differentiation focus meant that the product offered must satisfy the needs that have not been satisfied by other products of similar nature in the market. The reason for diversification was not only to maximize profits, but also to provide a cushion in case of slow down in sales for one product. What this meant was that the company was in a position to survive in case of a fall in the prices of some of its products. Although most of the companys functional strategies seemed to have been consistent with its competitive strategies, it became apparent that the company needed to deal with internal dissension, which affected its ability to move forward.
In terms of strategic options, the company should seriously consider the production of organic chocolates, as well as other healthy options. Although it is an expensive venture, the company must move into this direction if it is to survive. It appears necessary that the company puts some effort towards a feasibility study in order to establish how the move would impact the market. It is a very important step, one that should be taken at all costs, because it represents not only the companys present but also the future of the company. As already mentioned, this is perhaps the only way out for the company in the twenty first century.
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