Marketing Environmental Analysis of Chocolate Industry in Australia

This report provides a Marketing Environmental Analysis of Chocolate Industry in Australia. It discusses buyer behaviour, microenvironment, competitors offering and target market, and macro environment. It also includes a summary of the chocolate industry in Australia.

Running head: MKT600 MARKETING
MKT600Marketing
Assessment 1: Research Case Study Report
Student’s name:
Name of the university:
Author’s note:

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Table of Contents
Introduction......................................................................................................................................2
1. Discussing the buyer behaviour in relation to the chocolate products........................................2
2. Analysing the microenvironment................................................................................................4
3. Summarising the competitors offering and target market...........................................................6
4. Analysing macro environment.....................................................................................................9
Conclusions....................................................................................................................................10
Reference List................................................................................................................................12

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Introduction
The purpose of the paper is to show the significance of marketing in modern businesses
and highlight the grasp of effective marketing practices. Marketing in recent time has drastically
evolved and it is one of the critical parts of the business administration. When an organisation
designs the marketing plan; assessment of the consumer behaviour and evaluation of macro and
microenvironment is very important (Solomon et al., 2014). Marketing environment analysis
helps the organisation to understand the opportunity to apply the knowledge to develop the
effective marketing strategy. Donald B is chocolate product maker and he has two stores in
Melbourne. Donald B wants to expand the business nationally and internationally. Donald B also
wants to compete with larger rivals producing the chocolate products. This assessment strives to
develop the Marketing Environmental Analysis and understanding the advantage of opportunities
along with potential threats.
1. Discussing the buyer behaviour in relation to the chocolate products
Chocolate industry in Australia is expected to grow 7% between 2019-2013 as Australian
market has been facing high demand of the chocolate and foreign chocolate makers are
increasing in Australia chocolate market (Gallo et al., 2018). In Australia, almost 68.4% of
Australians who are aged above 14 consume chocolate in an average four week (Gabrielli &
Baghi, 2016. Among the Australians, chocolate bars are more popular; followed by boxed
chocolate and blocks. The buying behaviour of the customers differs in chocolate as young
generation likes to have the boxed chocolate to gift someone. Almost three-quarters (73%) of
Australian customers who purchase them on average four weeks eat them (Miner, 2018). Some

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of the best selling chocolate brands in Australia are Cadbury, Ferrero Rocher, Lindt and Cadbury
Roses.
Best-selling chocolate brands Number of Australians who
buy per 4 weeks
% of buyers who eat the
same brand per 4 weeks
Cadbury Favourites 610,000 65%
Lindt Lindor Balls 585,000 74.2%
Ferrero Rocher 535,000 74.3%
Cadbury Roses 335,000 63%
Table 1: Australia’s best selling chocolates
(Source: Ibisworld.com.au, 2018)
In Australia, 89% of the people buy chocolate from the open market or from the retail
shops; not from the chocolate confectionary. In a Chocolate retail market in Australia is
considerable as it had a market value of AUD 3,900 m with 521,000 tonnes being sold (Bellucci,
Mari & Picciaia, 2017). The customers in Australia make a purchase of chocolate as chocolate
tastes good and smell good. Chocolate feels good as it is the result of the brain releasing
chemicals in response to each chocolate experience (Noori & Najafpour, 2016). The chocolate
purchase is affected by several factors in Australia and some of the factors are friends and
acquaintances, a brand of chocolates, price, personal experience, health restrictions and allergies,
nutritional qualities and country of origin. Michelle Morgan makes the best chocolate in
Australia and most purchased chocolates in Australia are imported and high quality. Small
chocolate manufacturers play a significant role in chocolate industry and customers first come up
with stimulation of having something sweet. The customers search for the internal search as it is

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the memory of the customers (Cole, 2016). Australians customers do the external search as they
also do the comparison of shopping. Australians do the evaluation of alternatives available in the
market and customers’ choices can be altered based on the alternatives in the market.
2. Analysing the microenvironment
Suppliers:
Maximum power of the suppliers in the market can diminish the firms’ profitability by
increasing the prices or decreasing the quality of the suppliers’ product. Profitability of the
organisation can be reduced if an organisation cannot recover the raw materials expenses. Raw
materials needed in chocolate industry are the flavours, extra cocoa butter and dried milk powder
(Nestle, 2016). The local suppliers deliver the flavours and the dried milk powder to the
manufacturing plants of the chocolate company. Cocoa is mainly produced in tropical climate
and maximum of the companies are forced to import cocoa. Cocoa suppliers of chocolate
companies in Australia are the international firms and national firms as well (Pappas, 2016). The
wholesale chocolate and confectionery suppliers in Australia are Fudge Man, Gourmet
Confectionery, Belgian Delight, Gourmet Chocolate and Rockey Road. Suppliers' relation in
chocolate industry is the B2B relation; suppliers' power in chocolate industry lies in concentrated
suppliers' Group, suppliers' product is very essential, suppliers' product is differentiated and no
substitute products are available in the market (Khare, 2015). The chocolate companies can face
a justifiable threat to forwarding integration; therefore, suppliers of the chocolate industry in
Australia have bargaining power. The suppliers are limited in the chocolate industry; therefore;
the bargaining power of suppliers is high.
Marketing intermediaries:

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Marketing intermediaries act the link among the distribution process. In a chocolate
industry of Australia; distribution process is very important as intermediaries play connecting
role among the different channel partners (Badgaiyan & Verma, 2015). In chocolate industry;
intermediaries are large as the chocolate companies need various raw materials from local and
international agencies. Wholesalers assist to move raw materials between retailers and the
producers. Cocoa buying firms are the main intermediaries between the farmers and the
chocolate industry. The chocolate companies set the fixed percentage of the marketing budget
allocated for the chocolate to be sent into the special funding programme to be redistributed to
both farmers and the producers. In cocoa production, intermediaries play a major role to fix up
the price. As stated by Kwok et al., (2016), the intermediary has the role to enhance the
efficiency levels to monitor the application of training and fertilizers.
Public:
As stated by Schumacher, Kems & Tiggermann (2016), the public is a group of people
which may have potential interest in the organisation. Financial publics of the organisation are
important as these relationships impact on the ability to obtain funding for the business.
Financial publics include investment house, banks and stockholders. Media publics are
extremely valuable and media publics carry the features, news, editorial opinions and they
deliver them to the customers. In addition, government publics keep the eyes on regulations and
laws which can affect the manufacturing production. Therefore, in the chocolate industry of
Australia; the local public is more important which includes the neighbourhood residents and the
community people (Greenberg et al., 2015). Businesses can usually appoint the community
relations to understand the needs of the customers. Chocolate companies have the media publics

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to publish the blogs, newspaper, radio, magazines and television and social media networks to
communicate with the stakeholders.
3. Summarising the competitors offering and target market
Donald B started the chocolate outlets in Melbourne and operators in the Chocolate
manufacturing industry have faced the changing preferences of the consumers. The chocolate
manufacturing companies are producing different chocolate based products like cocoa products,
confectionery, crystal and glazed fruits, drinking chocolates, marshmallow and candied popcorn.
Industry rivalry
Industry rivalry is high in chocolate industry in Australia as there are many international
players are available in Australia. Some of the large chocolate industry players in Australia are
Cadbury, Arnott, Ferrero Rocher, Nestle and Mars. In addition, Hershey is another large
chocolate company which sells a large amount of chocolate in Australia (Ibisworld.com.au,
2018). These products are mainly sold in the retail stores and in the shopping malls.
Some of the local chocolate companies have their own outlets and Donald B mainly faces
the competition from the chocolate outlets. Monsieur Truffe is one such chocolate cafe owner
which opens the mysterious door of chocolate as they sell chocolate products in Melbourne
Brunswick East. Kakawa is raising the bar on chocolate making company in Australia and
another large chocolate shop is Noosa Chocolate Factory. One of the famous chocolate
manufacturing companies is Zokoko as this organisation has its own cafe and it sells in the open
market as well (Gallo, Antolin-Lopez & Montiel, 2018). Therefore, chocolate industry in
Australia has high competition. Substitutes in the chocolate industry in Australia are as large as

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many of the international and local companies have the market share. The local and international
players advertise through online, social media and television media to attract the customers.
The threat of new entrants
The threat of new competitors can pose threat to the existing competitors in the chocolate
industry. The capital requirement in chocolate industry is medium and it is a profitable industry.
Therefore, barriers to entry in chocolate industry in Australia are low (Moorhead, 2016). The
chocolate industry in low threat of new entrants as the new competitors can look to achieve the
profits.
Chocolate brands Strengths USP Target
customers
Offered
products
Cadbury
(International
Brand)
Cadbury has large
brand equity
Strong brand recall
Employee strength
is large
Premium quality
It is one of the
biggest and
trusted chocolate
brand worldwide
Children and
the young
generation
Chocolate
Santa,
Chocolate
snowman,
Chocolate
Calendar,
Dairy Milk
Mousse
Ferrero Rocher
(International
Brand)
It provides great
taste
An excellent brand
name with high
This is famous as
a gift item and it
is whole roasted
hazelnut which is
Upper-class
young
generation
Milk
Chocolate,
Hazelnuts,
Sugar, Plam

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brand loyalty
Good product
packaging
It available in
leading malls and
stores
Famous
international brand
encased in thin
wafer shell filled
covered with milk
chocolate
oil and wheat
flour
Zokoko Zokoko provides a
diversified
chocolate option
It is Australian
based company
It has its cafe
where the
customers can
observe the process
of making
chocolate
Zokoko chocolate
has its own flavour
Zokoko sells the
dark chocolate
and it has its own
cafe
Young
generation and
middle-income
group
Alto Beni,
Tranquilidad,
Chapter,
Goddess
Milk
Hershey Strong brand name
as well as
It offers 100 types
of various
Young
generation and
Hershey’s
Kisses Milk

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awareness
Diversified
products
Strong public and
social image
Renowned for
promoting various
segments
chocolate-based
products
middle-income
group
Chocolate,
Hershey’s
Chocolate
layer,
Hershey
cookies
Table 2: Competitors’ analysis
(Source: Self-developed)
4. Analysing macro environment
Demographic
Australia ranks 53rd in population worldwide and the unemployment rate in Australia
5.8%. Australia ranks 2nd in Human Development Index and in corruption, it ranks 11th (Davies
& Kitchen, 2015). Literacy rate in Australia is 99% and the broadband uptake in Australia is
13.8%. In Australia, chocolate and confectionery food consumption are high as Australians like
the taste of sweet. Age is an important factor in purchasing of the chocolate and aged generation
in Australia takes almost 40% (Beckett, Fowler & Ziegler, 2017). Chocolate products are meant
for the young generation. The male and female ratio at birth estimate is 1.01 in total; in chocolate
purchasing; both the sexes have different needs in buying of the products. Income is a very
important factor as upper and middle-class people purchase chocolates. Media gross household
income in Australia is $80,700 in 2016 (Crichton et al., 2016).

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Australia is politically stable, peaceful and prosperous country and there are three tiers of
democratically elected government; which are federal, local and state. Australia is ranked 1st in
political freedom in Australia and press freedom in Australia is also low. Australia’s regulatory
system is transparent which underpins the economic resilience.
GDP growth in Australia is 0.6% and the inflation rate is 1.8% (Baker, 2017). Average
gross salary is AU$ 1,605 on a weekly basis. Chocolate industry in Australia has the revenue of
AU$ 6 billion in 2018 and the annual growth of the industry is 0.7%. The chocolate industry
provides the employment of 11,225 and in Australia; there are more than 340 businesses are
there to deal in chocolate and confectionery (Kiseleva, 2017). Therefore, the stable economy will
increase the spending ability of the customers.
Consumer behaviour is an effort to understand the buying tendencies of the customers.
Australians have the tendencies to purchase the chocolate and social factors play an essential role
to influence the buying decisions of customers. The customers may have the reference groups
and they can be influenced by relatives and friends' group. Immediate family members can
influence the customers to purchase the chocolate-based products. The young generation buys
the chocolate for the loved ones and the disposable income of the customers is USD 33,410 in a
year (Lusch & Vargo, 2017).
Technology has changed the chocolate industry in production and packaging over the
years; starting with the introduction of the new machines in the production of the dark and liquid
chocolate. The chocolate industry has been using the social media in order to the promotion of
the products (Lovelock & Patterson, 2016). The blending of the chocolate needs technological
help which includes pathogen tastes system and filing patents.

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Conclusions
It has been observed that marketing environmental analysis has cleared the scenario that
Australia has a potential opportunity in the chocolate industry. Marketing environmental analysis
is the key to understand the possible impact of external local, international and national factors of
the small business. 68% of the Australian population aged over 14+ consume some kind of
chocolate in an average four weeks. Australians like to have a chocolate infrequent basis and
giving boxed chocolate is the fashion in Australia. In Australia; local chocolate brands like
Zokoko and Lindt have their own chocolate shops. In addition, international brands like Ferrero
Rocher, Hershey and Cadbury have their market share. Moreover, economic and demographic
conditions prove that chocolate and confectionary companies have the potential to grow in
Australia market.

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