Research Paper on Chocolate

The Day Chocolate Company was set up through the efforts of Twin Trading Company (TTC) in the UK and Kuapa Kokoo Ltd (KKL) from Ghana. In 1992, TTC assisted cocoa farmers in Ghana to form a co-operative, Kuapa Kokoo Ltd, to trade in cocoa. The whole idea was to enable the cocoa farmers to obtain a better price from their cocoa in the world markets, particularly, the fair trade market. KKL later decided to own a chocolate bar. The main aim here has been to maximize returns to their members. In 1998, TTC and KKL established the Day Chocolate Company (DCC) to realize their dream.

Both KKL and TTC have inter-laced missions. KKL’s mission is to get a fair or higher price for the cocoa farmers on the international market. TTC’s mission comes from their belief that primary producers should get a better deal for their products on the international market. DCC does not actually have its own mission statement but its aim is to send fairly traded chocolate onto the mainstream market with the aim of maximizing returns for Kuapa Kokoo farmers. Though DCC does not have its own mission statement, we are bound by our parent companies’ vision statements.

TTL’s mission was mission was to assist small-scale farmers, through trading, to achieve:

•  Greater awareness and ability to plan and think strategically, to be protagonists in the market
•  Greater bargaining power through this knowledge and the ability to gain access to resources and infrastructure through ownership or negotiation with third parties
•  Greater income at the village community level and thus greater capacity to invest in human capital for the future.

The DCC has, since its creation, produced three chocolate bars. These are Divine Chocolate, Divine Black Chocolate and Dubble. A new product, Divine Instant Chocolate Drink, will be launched latter part of 2002. The name ‘Divine’ was retained because of the value our customers attach to it as a chocolate product as well as its heavenly nature.
DCC does not own any production facility. It contracts manufacturers to produce its products for a fee. This arrangement would be maintained for the new product.

ATTRACTIVENESS OF THE PRODUCT

Every year, in Britain, a combined total of Ј4 billion pounds is spent on chocolate. It would be nice to think that a proportion of this could find its way back to the families currently living in Ghana with no electricity, no running water, no transport, no schools and no medical facilities.
All Divine products are known as the chocolate with a heart. The main idea behind this is the fact that for every time we buy and drink a cup of Divine Instant Chocolate Drink, we are helping to support farmers in poverty-stricken parts of Africa, pumping money into a poor economy, enabling village-folk to educate their children, and giving women the chance to make something of their lives. Plus it tastes good too!

TARGET CONSUMERS

Divine Chocolate, Divine Black and Dubble, have been aimed at specific targets. These being mid 20’s women, adults and kids respectively. Our initial market research indicates that, the product to be launched, Divine Instant Chocolate Drink should primarily be aimed at kids and expand the link Divine products have with kids. In the long term, other groups will be targeted. Initially, the focus is the English market.
As a first step, the chocolate drinks, sold through dispensing machines, will be launched. At a later stage, a powdered form Divine Instant Chocolate Mix in containers will be added.

BRAND MANAGEMENT

Brand management should recognize that every product has a limited life. Products go through a series of four life cycle stages. These are: introduction, growth, maturity and decline.
The Introduction phase is characterized by low sales, high costs, innovative customers, negative profits and few competitors. The Growth phase is characterized by rapidly increasing sales, costs stabilize, rising profits, customers are early adopters and competition is growing. At the Maturity stage, sales peak, costs are at their lowest per consumer, the stable number of competitors and profits begin to decline. The Decline stage has declining sales, profits, competition, costs are still low per customer.

We are aware of the fact that the chocolate market is saturated and that there is the need to build on our core competence. Brand management, in this project, is considered in relation to the life cycle of the Divine Instant Chocolate Drink in the next sessions of this report.

INTRODUCTION STAGE

Product

•  Divine Instant Chocolate Drink is a delicious, sweet-tasting, sink-in the- heart chocolate drink. It is a drink for all. It contains cocoa beans, skimmed milk and sugar.
•  The drink will be sold hot or cold all the year round according to customers’ preferences.

Price

• The drink is priced by cup sizes as follows: smaller size – 79p: larger size – Ј1.49. Even though the prices are bit higher than traditional chocolate drinks, the money accrued will find its way to the primary producers who live in poverty.

Promotion

Intensive promotional activities will be undertaken. These will cover the following:

•  Television adverts
•  Features articles in newspapers
•  Posters and leaflets
•  Road shows
•  Exhibitions
•  Co-branding with Starbucks and Cafe Nero
•  Free samples
•  Fair Trade fortnight activities
•  Internet advertisements
•  Competitions on Cartoon Network and Fox Kids to draw the awareness of our prime target to our products. This has already started and will continue.
•  Our special message about the need to ensure a fair deal for farmers from developing countries will be stressed in all our promotional activities

Packaging

•  The drink comes in disposable cups of two sizes, namely, small and large, through dispensing machines. The smaller size is aimed at kids and first time buyers. The larger size is for adults and existing buyers. The Divine logo and DCC logo are embossed on the cup. The cup will also carry the Fair Trade Mark .

Place

•  Presently all Divine products are available at Sainsbury’s, Iceland, Co-operative Shop, NUS shops, Body Shop and Tesco.
•  The new product will make use of Divine’s existing channels of distribution.
•  In addition, agreements have been made with Starbucks, Cafй Nero, Waitrose and Morrison to sell the new product.
•  The distributors will provide their own dispensing machines. These machines will bear the Divine, DCC and Fair Trade logos. This will save DCC the cost of investing in dispensing machines.
•  The distributors will earn a commission on sales.

GROWTH STAGE

Our objective here is to maximize our brand equity.

Product

•  Intensive market research will be undertaken to identify new target consumers.
•  A new concept for chocolate drinks will be developed. New flavors will be introduced to push the image of the product up.
•  The drink in powder form will be introduced.
•  Will seek to become a market leader of fair-trade chocolate drinks.
•  The powdered form of the chocolate mix will be introduced.

Packaging

•  New and innovative designs will be made in response to consumer preferences. One of our aims here is to increase volumes and to maintain high-quality packaging solutions. A conversion from standard disposable cups to a niche type of cup may occur during this stage, if volumes warrant.

Place

•  Review existing distribution channels to address any problems.
•  Increase the number of outlets for existing channels of distribution.
•  Introduction of new distributors e.g. work places, new supermarkets and schools.

Promotion

•  Continue with intensive promotional activities to push the growth of the products.
•  Social marketing.
•  Will continue to emphasize our core message.
•  Fair Trade fortnight activities

Price

•  Price review will be considered in response to competition.
•  Will, however, maintain our policy of fixing prices that are slightly higher than obtained in the normal chocolate drink market.

MATURITY/STATIONARY STAGE

Product

•  Analyze indicators through market research.
•  Diversify brands. Update and modernize current products.
•  Introduce more flavours e.g. Vanilla Flavour Chocolate Drink, Orange Flavour Chocolate Drink etc.

Packaging

•  Depending on the product category and volume, enhanced disposable or re-usable cups are good packaging solutions during this stage.
•  Customized cups may be introduced.
•  The whole idea is to improve packaging

Place

•  Undertake Intensive distribution to consolidate.
•  Non-profitable outlets would be withdrawn.

Promotion

•  Discount offers.
•  2 for the price of 1 offer.
•  Competitions to be organized.
•  Co-branding e.g. we may co-brand with Orange Communications when launching our Orange Chocolate Drink.
•  Advertisement should also encourage brand switching.
•  Fair Trade fortnight activities

Price

•  Price review will be considered in-depth in response to competition.
•  Will, however, maintain our policy of fixing prices that are slightly higher than obtained in the normal chocolate drink market. This would be to help the farmer in line with our mission.

DECLINING STAGE

Product

•  Will create new products to replace the old. This will bring new customers as well as the return of old customers who had shifted to other products.
•  Will continue to produce a limited quantity of old products. This will help to maintain our most loyal customers.

Packaging

• With an emphasis on cost reduction and a decreasing emphasis on reusable cups, disposable cups packaging are an option.

Place

•  Continue to consolidate our distribution channels while withdrawing from areas with no prospect.
  Promotion
•  Will promote our product at this stage by making attractive offers to consumers.
•  Will improve quality and upgrade our products in order to keep old and loyal customers. This is because, finding new customers costs more than keeping old ones.
•  Build relationships with customers.
•  Have newsletters on our website on our events and how to get involved.
•  Fair Trade fortnight activities

Price

At this stage price competition from dying products becomes more vigorous. Will stay in competition by stressing vigorously our core message and also keep our margins thin.