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The Irish Chocolate Company

Management and Marketing Principles Assignment

Q.1 What forces in the marketing environment has been most important for the Irish Chocolate Company?

Both the macro-environment and the micro-environment have been extremely important for the development and success of the Irish Chocolate Company with target customers. Introduction to Marketing (n.d) states that The macro environment consists of the larger social forces that affect all micro-environments and are generally outside the control of the company. The micro-environment consists of the forces close to the company that affect its ability to serve its customers. The macro-environment includes factors such as Political or legal factors, Economic factors, Sociocultural factors and Technological factors. The microenvironment however would consist of the companys suppliers, its customers, its competitors and the company itself. The macro-environment contains many forces which were very important for the Irish Chocolate Company. The Political and Legal factors influenced the company when they made the decision to go global. The company had to consider the fact that different countries would have different regulations in place regarding marketing issues and products on sale. The company would also have to consider E.U law when trading within Europe as this law takes precedence over national law and hence affects how firms do business in Europe. For example the advertising of alcohol is illegal in France as is advertising of retail stores. (Blythe J, 2005). Economic factors would also have a huge impact on the Irish Chocolate Company. They have described themselves as being at the premium end of the confectionary market. Hence their prices would be higher then most other companies in their market. The company boasts that they only use products of the highest quality and that they package their products in highquality gift boxes. In Economic periods of prosperity within a country, consumers would be much more willing to buy high class products such as Butlers chocolates, as there would be

high levels of employment and therefore customers would have high levels of disposable income. In times of recession however, during which unemployment rises, a customers ability to buy luxury products declines. (Introduction to Marketing, n.d, p.11) In 2000, the Irish chocolate confectionary market was worth a massive 337 million, which could be said to be due to the economic boom in Ireland at that time. The Sociocultural environment could be linked with the Technological environment in this case. The sociocultural environment deals with the companys marketeers understanding the needs and wants of their customers at a particular time. A cultural change facing the company would be the modern popularity of the internet for purchasing products. Butlers acknowledged this trend and realised that there was an opportunity for them to sell products online. Their most recent website was launched in 2001, including three sections for consumers, suppliers and corporate customers. This modern website caused their web sales to grow by 500 percent in one year. Therefore by accepting the cultural change occurring in society, Butlers increased their market and sales massively. The micro-environment would prove to be equally as important for the Irish Chocolate Company as the macro-environment. The most important factors for the company being their Suppliers, Customers and Competitors. Butlers chocolates would not be the luxury products they are today without the top quality ingredients they are made with, provided by the companies suppliers. Butlers can charge high prices for their products because of their high quality. Only the best raw materials are used for the chocolate, giving them the characteristic Butlers taste loved by many. By losing important suppliers, the quality of the chocolates could fall and customer satisfaction would follow. Therefore it is good business practise to maintain good relations with suppliers and keep in contact as much as possible. Of course, no company would exist without its loyal customers. Butlers aim their products to a particular sector of the confectionary market, their high prices and luxury packaging attracting customers who like to indulge themselves. Whether it is buying Butlers chocolates as a gift for a loved one or stopping into a Butlers caf for a coffee. The Irish Chocolate Company saw a gap in the confectionary market and noticed a need for quality that was not being fulfilled by their competitors. They aimed to deliver the right product, at the right price and in the right place to satisfy their customers. (Introduction to Marketing, n.d, p.12). Customers will always make comparisons between your product and your competitors. Butlers needed to monitor their competitors and offer a service which their competitor was not offering. One competitor, Godiva, delivered their products in plain boxes, labelled with an address sticker and containing an invoice. Butlers decided to therefore focus its attention on their products packaging and presentation which would be acceptable as gifts. In conclusion, The Irish Chocolate Company has successfully acknowledged the different marketing forces affecting their company in both their micro and macro environments. They have overcome all obstacles and held good relationships with their customers and suppliers, causing them to become one of the most successful premium chocolate brands in the country.

Q.2 What aspects of consumer behaviour are important in understanding the buyer of premium chocolate products?

When trying to understand the consumers of premium chocolate products such as Butlers chocolates, one must consider whether the products in question are Rational or emotional. In the case of Butlers chocolates, they would be perceived as being emotional products, as they are luxury, high-priced goods. Their luxurious packaging would appeal to the emotions of a potential customer. A consumers main decision making process consists of the following stages: Problem recognition, Information Search, Information Evaluation, Decision and Post-purchase evaluation. The Irish Chocolate Companys main aim is to be considered in a customers decision making process as a source of luxury chocolate and as providing high quality cafes where the customer can combine chocolate and coffee. There are certain factors that would influence a customers decision to purchase a Butlers product. The Irish Chocolate Company would have to consider these factors when marketing their products. The main influences on the buying decision are personal factors, psychological factors and social factors. Consumers can often form emotional attachments to products, creating customer loyalties to that product. Other personal factors in the buying decision include the customers age, gender, income, occupation. Butlers chocolates would take into account what gender and age group would purchase their products depending on their packaging. Also a customers income would determine whether they are willing and capable of purchasing premium chocolate products such as Butlers. The economic situation at the time would also influence a customers purchases. For example in an economic boom customers would have more disposable income to spend on luxury products. (Blythe J, 2005) Psychological influences include a customers personality and how it affects their purchases. In regards to butlers chocolates, a customer who has no interest in expensive luxury chocolates and does not enjoy eating them would not be consumers of Butlers chocolates. Marketeers must take different peoples opinions into consideration. Pre-existing knowledge of a product will also affect a consumers purchases. If a customer of Butlers caf had a good experience there, they would be more then likely to return when they are considering where to get a coffee. Normative compliance is known as the pressure exerted onto a person to conform or comply. This pressure is a Social factor influencing a persons buying decision. The major sources of these pressures are reference groups which include a persons friends, family and colleagues. For example if there is a tradition in a family of buying Butlers chocolates for birthdays and anniversaries, that family would be loyal to the company as Butlers chocolates would always be considered in their decision making process. (Blythe J, 2005, p.56) Once the decision has been made to purchase the chocolate companys products or to go to one of the Butlers cafes, the company must now consider their customers post purchase evaluation. The company must understand their customers and realise their wants and expectations of the product. Consumers like feeling that they have made the right decision in

their choice of product. A negative post purchase evaluation could lead to a customer never purchasing the product again. If, however, the customers expectations of the product or service have been met, a strong possibility of lasting loyalty has been created. The Irish chocolate company must consider this when producing and packaging their products to suit their customers wants. In their case this means producing high quality chocolate made only from the best raw materials, packaging their products in decorative gift boxes and pricing their products accordingly so that their customers know they are purchasing luxury goods of high quality. In order for The Irish Chocolate Company to be successful and understand the needs and wants of their customers, they must take into account consumer behaviour, and what kinds of people purchase premium chocolate products. When all these factors have been taken into account, the company will have the ability to focus directly on making sure their product is number 1 in a consumers mind in their decision making process, hence increasing their customer loyalty and the success of the business.

Q.3 How has the Irish Chocolate Company segmented their market?

According to Palmer RA & Miller (2004) Segmentation has been identified as an important if not one of the most important tasks that industrial marketers can undertake. Segmentation is the process of dividing a market into different groups of customers. This means looking more closely at the market and finding ways to split it into manageable parts, or groups of customers with similar characteristics, and then to concentrate on serving the needs of one or two of these groups rather than trying to be all things to all people. (Brassington & Pettitt, 2007). Sub-groups could be made of people with similar backgrounds, behaviour, values and needs. There are a number of benefits in The Irish Chocolate Company segmenting their market. In doing so the marketer becomes more attuned to the unique needs of customer segments. It also focuses the companys product development on one segment of the market, developing profitable pricing strategies. Segmentation also provides guidelines that are of significant value in allocating marketing resources. There are a number of bases for segmenting the consumer market. The main variables include geographical, psychographic, behavioural and demographic segmentation. All of these factors would have been considered by the Irish Chocolate Company when segmenting their market. Geographic segmentation defines customers according to their locations, such as different countries, regions, counties, cities or urban or rural areas. Geographic segmentation is thought to be dangerous for a company that are too geographically focused as it may be wrong to presume that all people living in one area have similar needs and wants. There is also a danger of that company being vulnerable to competitors who have a more customerfocused segmentation strategy. This type of segmentation would have operational advantages, particularly concerning customer contact and developing efficient distribution systems. (Brassington & Pettitt, 2007) The Irish Chocolate Companys main export was Britain. They noticed that the luxury chocolate market in Britain was worth around 632 million and that the premium boxed-chocolate market had grown by 24 per cent between 1994 and 1998. These figures clearly showed that there was a huge market for the Irish Chocolate Company in Britain, and by trading there they had segmented their market geographically. Trading here in Ireland was also geographical segmentation as the company noticed that there was a need for a high-quality chocolate brand, and they provided this service to their customers. When the Irish Chocolate Company made their transition to the internet, they had erased all geographical boundaries, creating a single global marketing strategy. By having their catalogue on the internet and accessible to customers worldwide, it didnt matter whether the online retailers were in close proximity to the customer or in another country altogether. The only possible difference would be the shipping charge. Psychographic segmentation would be one of the most important bases of segmentation for the Irish Chocolate Company. This form of segmentation divides the consumer market according to social class, life-style, or personality. Lifestyle has been defined by Kotler (1988, as cited in Make that Grade, n.d, p.91) as the persons pattern of living in the world as expressed in [their] activities, interests and opinions...[it] portrays the whole person interacting with his or her environment. Defining the lifestyle of a customer allows the marketer to sell their product on an emotional level to enhance that lifestyle rather than on a functional one. The Irish Chocolate Company would have to take into account the type of product they are selling, and segment their market into the types of people who would

purchase their product. A consumers interests, activities, opinions and demographics would be considered. As Butlers chocolates and indeed all of the products produced by the Irish Chocolate Company are made with only the best raw materials and are packaged in the finest wrapping, they would be placed at the premium end of the confectionary market. Therefore, the company can charge high prices for the high-quality products it is providing. These luxury chocolates would have to be aimed at consumers who are willing and capable of purchasing them. Since chocolate is not healthy to consume in large quantities, The Irish Chocolate company would not include consumers in their segmented market who value fitness and health highly. Segmenting the market demographically means dividing consumers into categories of age, gender, occupation, religion, nationality and family size. It is the most commonly used method of segmenting markets as the necessary information is usually easy to obtain from public sources, which makes it a very accurate and efficient method. On the negative side however, demographics used alone assume that all people in the same demographic group have similar needs and wants which is not always the case. Hence this form of segmentation is used alongside another more consumer-focused method. (Make That Grade: Marketing, n.d, p.92) The Irish Chocolate company aims its products to Female consumers around the age of 20 years old and over. The companys lavish packaging would appeal more so to the emotions of females then males and the richness of the chocolate would not appeal to young children. The high prices of Butlers chocolates and the companys other products require a customer to have a medium to high income to be willing to purchase them. The Irish Chocolate company would take consumers occupation into account when deciding where to advertise their products, and would aim their marketing at professionals. Finally, Behavioural Segmentation would also be used by The Irish Chocolate Company for segmenting their market. This form of segmentation involves addressing the individuals relationship with the product, rather than building up a detailed profile of the individual themselves. The Irish Chocolate Company would consider the consumers usage rate of the product, their user status, their readiness to buy, brand familiarity, or time of buying. (Make that Grade: Marketing, n.d, p.92) Loyalty can also be a useful mechanism for the company. They can carry out market research to distinguish between customers who will continue to purchase the brand, customers who might switch brands or reduce their consumption, non users who might buy the brand if modified, and non-users who are unlikely to change to your product. The Irish Chocolate Company would aim to maintain customer loyalty by continuously providing a high-quality service in their cafes and in their products. The company would also segment the market into potential customers who have a very positive attitude of the product, and into those who are hostile and would need an opportunity to sample the product, or an advertising campaign to ease their hostility. The Irish Chocolate company want to make sure that their products are viewed in a positive light, as being premium chocolate products for all occasions. By opening their Butlers cafes they have increased their user rate to those who enjoy coffee as well as chocolate. The companys main achievement is to bring the relationship between the customer and their products into sharper focus, which provides a greater understanding of the customers wants and needs. (Brassington & Pettitt, 2007) In conclusion, The Irish Chocolate Factory has used many different methods to segment their market successfully in order to focus directly on possible consumers of their products. In doing this, the company has insured the highest returns for their marketing spend. By segmenting their market as they have done, The Irish Chocolate Company is able to

concentrate its efforts on pleasing one group of people with similar needs, instead of using a standard product and perhaps pleasing very few.

Blythe J. (2005) Essentials of Marketing, Prentice Hall. Brassington, F., & Pettit, S. (2007) Essentials of Marketing. FT/Prentice Hall: Essex Make that grade: Marketing (n.d.) Introduction to Marketing Make that grade: Marketing (n.d.) Segmentation, Targeting and Positioning