Marketing Environment Analysis for Donald B Chocolate Company

This report analyses the microenvironmental forces, macro-environmental forces, and competitive pressures for Donald B, a chocolate manufacturing company in Melbourne, Australia. It also includes an analysis of buyer behaviour and strategies for expanding operations nationally and internationally.

Donald B Chocolate Company
Marketing Environment Analysis
Assessment 1: Research Case Study Report
Student Name: Student ID:
Subject Name: Marketing Course ID: MKTG6002
Date Due: Professor Name:
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Executive Summary
Companies before designing their marketing strategies undertake thorough research of
the market forces. Two primary forces that impacts a company’s operations are micro-
environmental forces, macro-environmental forces and competitive pressures. The scope of this
study deals with analysing these factors for Donald B, a chocolate manufacturing company in
Melbourne, Australia. A brief analysis of buyer behaviour, micro-environmental forces, macro-
environmental forces and competitive pressures is analysed considering that the Company will
expand its operations across national and international basis.
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Table of Contents
Executive Summary.........................................................................................................................2
1.0 Introduction................................................................................................................................4
2.0 Buyer Behaviour........................................................................................................................4
3.0 Microenvironment.....................................................................................................................6
4.0 Competition Analysis................................................................................................................8
5.0 Macro-environment Analysis..................................................................................................10
6.0 Conclusion...............................................................................................................................11
7.0 Reference Lists........................................................................................................................12
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1.0 Introduction
Market Environment Analysis is the most appropriate and adequate method to arrive at
an understanding related to surrounding of an organization (Aaker, 2008). Donald B is a
chocolate maker in Melbourne and also has two stores. In order to grow its brand in national and
international markets, it has to develop strategies in order to cope with markets. The scope of the
study analyses buyer behaviour in the market, microenvironment, macroenvironment and
competition analysis for the Company to understand possible impact on its business.
2.0 Buyer Behaviour
Buyer behaviour is a complex type of outcome in which a potential customer acts
connected to a decision making for a purchase. Chocolate is a favorite product that attracts
almost all variable type of demographics, hence analysing them further will help segment the
market appropriately and cater to the same (Magretta, 2013). Donald B will be able to design
marketing mix in an appropriate manner by analysing the complex buyer behaviour of
consumers in the market also influence them. A consumer while making a purchase decision
related to any product goes through a complex cycle of decision making on basis of their need
based analysis system. The Company makes a varied type of products as cocoa product,
confectionery, crystalized or glazed fruit, liquorice, marshmallow, drinking chocolate, candied
nut, candied popcorn and so on. A wide range of factors impacts buyers while they making
decision for purchasing a particular product as cultural factors, social factors, personal factors
and psychological factors (Hawkins, 2010). The factors acts within the complex system in which
buyers takes decision related to a particular product.
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Figure 1: Buyer Behaviour
Varied behaviour of a buyer is dependent on brand of the product, in case there is significant
difference between brands then buyers will react in a different manner compared to when there is
almost nil difference between them. There can be two types of behaviour of buyers as high
involvement and low involvement behaviour. The product made by Donald B does not
significantly differ from other brands that offer chocolates (Solomon, 2012). Hence it is expected
that in case a buyer is highly involved in purchasing chocolates regularly there will be less
dissonance reducing buying behaviour. Meaning ones buyer recognizes need for purchasing
chocolates, he or she will visit a particular store assess the alternatives available and post
evaluation of alternatives will make a purchase. Most of the products offered by Donald B is low
involvement product apart therefore, a consumer is less likely to face dissonance in their buying
behaviour. In case of global expansion if the Company decides to manufacture high involvement
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product in chocolates as boutique chocolates or specialty chocolates, then its brand presence is
bound to play a huge role.
Most of the products that are manufactured by Donald B is low involvement product as
consumers generally makes purchase of chocolates from impulse, as when influenced by kids or
women. It is necessary that buyer outcome in case of products that are offered by the Company
will be a habitual buying behaviour arising from factors as children present in family, women
who like chocolates. Melbourne is a city with relatively stable population and consumers having
spending power compared to suburbs. The Company with its two stores hence is able to cater to
large number of customers in the city and also those coming to the city from suburbs for job
purpose. In case the brand is able to deliver expected taste as per preference of consumers in
chocolates, it is likely to have regular consumers that make purchase of its products.
3.0 Microenvironment
Chocolate is a highly liked product amongst multiple segments of consumers. In
Australia prevalence of a number of chocolate makers and their presence in the market makes it
difficult for a Company to establish a stable set of customers. Micro-environmental factor
analysis relates to prevailing conditions within the industry that allows the Company establish a
suitable position. While a Company as Donald B relatively new in the market compared to
existence of multiple traditional chocolate manufacturers in the market establishes its business it
faces a number of challenges. Most important factor that has impact on the Company is the
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forces that buyers or publics poses. As discussed earlier with emergence and prevalence of a
number of chocolate manufacturers in the region, buyers or the publics have tremendous variety
to make their purchases from (Australia, Retrieved on 31st March 2018). Buyers are offered with
varied types of chocolates with varied types of prices. Across national as well as international
markets buyers have presence of a large number of brands to select their products from. They
can select from a wide range of the product available across the market. In this scenario presence
of the brand or brand loyalty will make significant difference in purchase behaviour of the
consumer. The industry in which the present Company is competing can expect high levels of
switching behaviour amongst buyers. The product manufacturer has to design strategies to make
its products widely available and accessible to consumers and at affordable rates. The brand can
also provide added advantage as discounts, free gifts to lure customers more towards making
brand purchase. The Company also has to make high investments into promotional activities
such that publics recall value is high. The analysis proves that the brand experiences high
pressure from its consumers due to a number of factors.
A Company is able to establish and expand its business on basis of supplier relationship,
which provides raw materials to the Company. Supplier power over a Company determines its
success or failure in the market. Most integral raw material for manufacturing chocolate is cocoa.
Australia manufactures small amounts of cocoa in its Northern and other parts. Production and
supply of Australia is well regulated by Governmental engagement and with presence of Unions
in the region. Fair trade agreements prevent cocoa producers being exploited in the region and
majority of chocolate manufactures gets their supply of cocoa from Australian agriculture itself.
Due to high demands of cocoa, suppliers tend to charge high prices which remain stable
throughout the year. Presence of Supplier Unions prevents any process of bargaining from taking
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place and chocolate manufactures across the country are served on similar rates. Donald B being
a relatively smaller manufacturer catering to demands in Melbourne experiences significant
power threat from suppliers of cocoa. In case the Company decides on global business, then it
has to ascertain a cost effective supplier from Africa, that manufactures large quantities of the
product. In such cases as well the Company will face significant pressures due to established
chocolate businesses around the world getting their raw materials from there. Therefore, it needs
to sell at a price that covers its cost price for cocoa and cannot afford rates below that.
4.0 Competition Analysis
Donald B wants to expand its company’s operations in national as well as international
markets. The Company will have to encounter several competitive pressures from national as
well as international companies. Chocolate manufacturing is a highly lucrative industry due to
prevalence of wide range of customers. Moreover, chocolate manufacturers that operate on
international scale operates on costs competitive basis with their suppliers being based in Africa,
manufacturing plants based I n less developing countries and so on (Armstrong, 2014).
Internationally Donald B has to compete with Cadbury, Mars, Ferrero Rocher, Toblerone,
Godiva, Ghirardelli, Patchi and many more. While national competitors constitutes Crest
Chocolates, Chocolate Gems manufacturers, Melba’s Chocolates, Charley’s Chocolate Factory,
Haigh’s Chocolates, FMI Australia Pty Ltd, Chocolate Apple Factory and many more. This
implies that competitive pressures are tremendous on the Company on national as well as on for
international basis.
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National level chocolate manufacturers have established their businesses since a
prolonged time hence have supplier value chain and distribution relationships as well. National
chocolate manufacturers sells products through multiple avenues, through their own stores, also
through retail and convenience stores. The product being a low involvement one requires brand
presence or presence of the product across multiple locations for high sales to take place. Donald
B though has considered selling its chocolates through Coles, Woolworths and Aldi or other
specialty stores have not been successful in doing so. Meaning the product presence or brand
presence of the Company is significantly low and very few buyers are aware of the products. It
implies that the Company in order to cater on national basis has to first make its products
available across a wide range of stores and then assimilate consumer response to the product.
Once it offers its products across national platform will it be able to successfully understand the
competitive pressures and then design marketing strategies accordingly (Esch, 2008). It has to
maintain a steady shipment or continuous supply of the product to gain brand prevalence in the
market, while maintaining price competitiveness. In the international markets as well the
Company will face tremendous competitive pressures and it has to cater to its products at cost
effective rates. It also needs to establish a value chain of distribution by making tie-ups with
large retailers to cater to larger segment of consumers.
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5.0 Macro-environment Analysis
Macro-environmental factors are those forces that the country’s environment implies
upon the Company’s operations. Donald B is currently catering to Australian markets hence
macro-environmental factor related to the Australia will apply on it. Australia has a stable
political system. Bureaucratic intervention into businesses is minimum, where businesses are
merely required to obtain trade license from Chambers of Commerce and pay their taxes in it.
Being a political democracy, businesses receive tremendous impetus from the government to
establish and flourish their businesses. Economic environment within Australia is also stable
with stable currency rates (www.businessinsider.com, Retreived on 31st March 2018). Markets
are stable in Australia and inflation rates are low. There is low rates of unemployment within the
country. The Company will not face any negative influences from the economic factors in
Australia. Socially, Australia comprises of a mixed population. High and robust population with
stable number of immigrants offer large number of consumers for an y products to businesses.
Maximum part of the society is aged below 60 years of age meaning they have high propensity
to spend. Technologically Australia is quite developed where companies can easily offer their
products through ecommerce platforms. The Company can easily sell its products through
ecommerce website or by making tie-up with other ecommerce portals. Cultural factors as make
chocolate a well-liked product within the country. With growing young and robust segment of
the population, most like consuming energy bars as a healthy snack or chocolates for meeting
their empty calorie needs. Internationally however there is bound to be several impact from
macro-environmental forces (Ferrell, 2012). The Company will need to comply with laws and
regulations within the country that it operates and caters to. It has to obtain trade license, Food
and regulation authority certification and any other certification as deemed appropriate.
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Moreover the Company has to comply with their political and cultural system prior to catering
their products.
6.0 Conclusion
Analysing above macro-environmental and micro-environmental factors implies that the
Company can easily expand its business operations nationally and internationally. It however has
to comply to norms and regulation of the country and area of operations. Analysis of competitive
forces and consumer behaviour will help the Company to cater to products in a well fashioned
manner.
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7.0 Reference Lists
Aaker, D. K. (2008). Marketing research. John Wiley & Sons.
Armstrong, G. A. (2014). Principles of marketing. Pearson Australia.
Australia. (Retrieved on 31st March 2018). Market Research Report.
http://www.marketresearchreports.com/countries/australia.
Esch, F. R. (2008). Marketing. John Wiley & Sons, Ltd.
Ferrell, O. C. (2012). Marketing strategy, text and cases. . Nelson Education.
Hawkins, D. I. (2010). Consumer behavior. Implications for marketing strategy, 5.
Magretta, J. (2013). Understanding Michael Porter: The essential guide to competition and
strategy. . Harvard business press.
Solomon, M. R.-B. (2012). Consumer behaviour. Pearson Higher Education AU.
www.businessinsider.com. (Retreived on 31st March 2018). Australian Interst Rates.
https://www.businessinsider.com.au/why-australian-interest-rates-are-unlikely-to-return-
to-pre-gfc-levels-2017-2.
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