Environmental Analysis of D. Bilo Chocolates: Opportunities and Threats

This report provides an environmental analysis of D. Bilo Chocolates including the analysis at micro level and Macro level. The micro analysis includes competitor’s analysis, elements of marketing mix. Along with this there is evaluation about the things that are providing company with competitive advantage as well as about customers. In the macro analysis this report presents the industry analysis of chocolate industry as well as about major trends and potential impacts. In the last section of the report opportunities and threats related to the cite firm has been done.

MARKETING

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EXECUTIVE SUMMARY
Business environment has changed globally. This has made it essential for the companies to
understand its internal and external environment. In this report the micro factors such as
elements of marketing mix, competitor’s analysis and consumer analysis have been done.
Along with this the report consists of macro analysis which analyses the elements like
industry analysis issues faced by the chocolate industry and the major trends in the Australian
chocolate market has been provided. In this PESTLE factors along with Demographics have
been elaborated. Potential impact on the industry and the rating has been provided in the
report. Donald B needs to grab the opportunities and counter the threats on the basis of
evaluating different aspects of the business. For this they need to work on their research and
development works. In the last recommendations have been given which includes making
children as their primary target customers that too from different age range. Innovation in the
products must be based on target segment that is made by the company.

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Contents
EXECUTIVE SUMMARY...........................................................................................................................1
Introduction...........................................................................................................................................2
Macro-Environment Analysis............................................................................................................3
Industry Analysis...........................................................................................................................3
Major trends..................................................................................................................................6
Micro-environment analysis..................................................................................................................8
Competitors.......................................................................................................................................9
Marketing Mix.................................................................................................................................10
Competitive Advantage...............................................................................................................11
Consumers...................................................................................................................................12
Potential Impacts.........................................................................................................................12
Summary of Analysis..........................................................................................................................13
Opportunities and Threats................................................................................................................13
Conclusion...........................................................................................................................................15
References...........................................................................................................................................16
Introduction
In the whole world, the ways of doing business has changed and so is the case with chocolate
industry. There are several factors that are affecting the business of the Chocolate Industry. In

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this regards it is essential for the companies under it to analyse the environment (Abdel-
Basset, Mohamed and Smarandache, 2018). This is because both internal and external factors
are influencing the business of companies in Chocolate industry. Such analysis is also
necessary for finding opportunities and threats which can be achieved with the help of
various types of strategies. For the entrepreneurial venture that is expanding their business
into other parts of the world, this is highly necessary.
Donald B is an entrepreneurial venture and is in the business of manufacturing chocolates. He
had his brand name D. Bilo Chocolates. He had two stores, one in Toorak Rd South Yarra
and other one is Lygon St Carlton. In this report, there is a detail description of environmental
analysis of D. Bilo Chocolates including the analysis at micro level and Macro level. The
micro analysis includes competitor’s analysis, elements of marketing mix. Along with this
there is evaluation about the things that are providing company with competitive advantage
as well as about customers. In the macro analysis this report presents the industry analysis of
chocolate industry as well as about major trends and potential impacts. In the last section of
the report opportunities and threats related to the cite firm has been done.
Macro-Environment Analysis
In the type of business condition prevailing all over the world, it has become essential for the
organisations to understand external factors that are affecting their business (Lu, et. al. 2018).
The macro environment affects almost all the types of business.
Industry Analysis
The Chocolate industry has its revenue of $5.7bn in 2017-18. It has been further forecasted
an increase of 1.3% over the last five years, which will ultimately reach $6.1 billion (Lupton,
Sánchez and Kerpel, 2018). This will increase the demand for the product in the particular
market. Then, the next is the quality of the product. This means that the producers should try
to maintain the quality of the product, which means that the producer should use the new and
natural things for making the product. This makes the product more authentic and the
consumers will purchase the product due to the use of natural ingredients in the products
(Neilson, et. al. 2018).
The major issues are:
Issues Description
Downsizing There is a constant decrease in the size of the bars.

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Price Prices of the chocolates have gone up which is reducing the sales
growth.
Tax There is a constant increase in the taxation especially the ones that are
linked with import of raw materials
Unfavourable
Weather
There is an unfavourable weather conditions prevailing in the
producer countries. This is directly affecting the production of cocoa.
This industry has opportunity in the rural market where there are larger market segments that
have not been properly addressed (Ogden, 2018). In the outskirts regions of the country, there
are huge opportunities available in the market.
Industry Sector Analysis (IBIS Reports)
Key Points/
Issues
Chocolate &
Confectionery
Manufacturing
(CCM)
Confectionary
Manufacturing (CM)
Speciality Chocolates
Stores (SCS)
What includes Operators of the
industry mainly
manufacture chocolates
or cocoa based
confectionery. They
distribute it through
grocery, supermarkets
as well as convenience
stores.
Chocolate bars
Kitkat
M&Ms
Mars
Block chocolates
Snickers
Operators of this
industry mainly
manufacture
confectionery products
excluding some
products like chewing
gums and chocolates.
Candied nuts
manufacturing
Marshmallow
manufacturing
Liquorice
manufacturing
Chewing gums
Operators of this
industry are mainly
engaged in retail of
chocolate products,
pure chocolates. It also
includes chocolate
products through
speciality stores both
made through premium
machines and
handmade.
The industry has
moved towards the
concept of ‘Café trade’
Speciality chocolate
retailing
Organic chocolate

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Mints
Gummies
Candies
retailing
Chocolate food and
beverage retailing
Premium chocolate
retailing
Fair trade chocolate
retailing
Seasonal boxed
chocolate retailing
Revenue In 2017-18 it was
around $5.7bn and it is
expected to have
revenue of $6.1bn in
the year 2022-23.
In the year 2017-18 it
around $849.1m.
It is having a revenue
of $317m in the year
2017-18 while in the
year 2021-22 it is
going to become
$356m.
Annual
revenue
growth rates
In the year 2013-18 it is
having a growth rate of
0.7%. In the coming
years from 2018-23, it
is going to grow with
the rate of 1.3%
There was decrease in
the annual revenue of
the industry as the
growth rate was -0.1%
while in the coming
years it is expected to
grow with the rate of
1.3%.
Consumption of
artisanal chocolate is
increased due to high
intake by customers.
There is stimulated
growth due to increase
in the number of
special occasions.
In the coming five
years also there will be
increase in the growth
rate.
Operations of café
style will give the
industry with its
highest of growth rate.

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Its revenue growth rate
in the year 2012-17 is
expected to be at 3.9%.
In the coming years it
is expected to remain
at 2.4%.
Major trends
These are the major forces or trends that help in shaping particular industry and strategies and
the actions that are there in the industry (Shemesh, et. al. 2018). These generally include all
the external factors of the company. These include:
Factors Issues Impact on company Opportunity (O) or
Threat (T) &
Importance
(H,M,L)
Political Rules and
Regulations.
Import duties
The government of Australia has
made many types of rules and
regulations that would is
influencing the chocolate industry.
The increase import duties on the
raw materials have affected the
prices of the chocolates (Singh, et.
al. 2018).
(-M)
(-M)
Economic Instability in
the economy.
Various
factors are
affected.
This has influenced the business of
chocolate firms as there is risk in
the new kinds of investments.
These factors generally represents
the economy in the wider sense,
which includes the growth rates,
(-H)
(-M)

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employment levels, materials
including energy and
unemployment’s, cost of raw, steel
and petrol, inflation rates and
exchange rates. These factors also
vary from country to country
(Stringfellow, 2017).
Social Buying
Behaviour of
the consumers.
These are the factors, which
generally relate to the culture and
backgrounds of the people. This
means the cultural factors also
affect the buying behaviour of the
customers. As the customer’s
choice, of purchase is going to
affect the sales of the product in that
particular country (Strobl, Krump
and Borek, 2018).
(+H)
Technology Fast
Innovations
Quality
maintenance
The technology, in this case, plays a
very important role as the new
developments and inventions,
changes in internet and e-commerce
and last it includes government
spending in the research.
The technology is used here is to
maintain the quality of the product
and improve the efficiency of the
product.
(+H)
(+H)
Legal Consumer
laws
The consumer laws have
strengthened over the past few
years. This has affected the
company’s operations.
(-M)
Environment Burden on With the increasing demand for the (-H)

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resources quality products there is increase in
then demand for high quality raw
materials. This has put pressure on
the farming activities of the nation.
Demographics Demographic
change
This further includes the study of
the human populations including the
term of density, size, location, age,
gender, race, and other statistical
data. This includes the involvement
of the people and the people make
up the markets. In this case, the
demographic environment includes
the age of the population that
purchase a particular product. For
example, if in a particular country
the population is of young age so
the people will prefer chocolates as
a gift many times.
(+H)
Micro-environment analysis
Micro- Environment includes all those factors that affect the business strategy. Along with
this it also affects its decision-making and performance. Such factors generally involve the
employees, media, customers, stakeholders, competitors, and suppliers (Bisbis, Gruda and
Blanke, 2018). This is considering all the individual aspects, which are present there in the
market.
Competitors
The competitors are Nestle Australia Ltd, Mars Australia Pty Ltd, Mondelez Australia
Holdings Pty Ltd, and many other local special chocolate shops (Calof, Arcos and Sewdass,
2018).
Competitors Company Market Product Key Branding and

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Name Size Share Range Product Positioning
Nestle 447 factories 15.1% Beverages,
milk, ice
cream,
chocolate
and
confectionery
Milk Service, product,
channel creation,
and image
differentiation.
Mondelez 44 brands 11.9% Salad
dressing,
cheese, and
dairy
products,
milk, wood
products and
manufactured
goods.
Food and
Beverages
Sustainability
growth from top
to bottom line
(syracusecoe.org.
2018).
Mars 20
manufacturin
g facilities in
78 countries
12.3% Chocolate,
gum, bars,
candy,
beverages,
pet food,
foodstuffs
and mint
Pet Food They had some
of the principals
including
responsibility,
efficiency,
freedom, quality,
and mutuality.
There are various chocolate stores that are also affecting the business of the cited firm. Some
of them are:
 Mork chocolates that is famous for their hot chocolates.
 CACAO LAB famous for handicraft chocolates.
 KOKO BLACK famous for artisan chocolates.

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(Source: Herald sun, 2018)
Marketing Mix
Marketing Mix
elements
Nestle Mondelez Mars
Product Beverages, Milk and
its products, prepared
dishes and cooking
aides and chocolates.
Meals, Dairy and
Side Dishes,
Cooking/Baking
Goods, cheese
products, Bacon, Deli
Meat, and Hot Dogs,
and Desserts,
Dressing, Sauces and
Condiments, Snakes
and beverages.
Divided into six
segments including
symbioscience, food,
drinks, Wrigley,
Petcare and chocolate
(Diehl,2018).
Price Depend on the Adopt reasonable Depend on

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market of individual
product
pricing policy as
their major target
consumers are price
conscious.
advertising,
production,
distribution,
marketing, and rival
brands.
Place One level and three
level distribution
channel is used.
Due to its
international reach, it
is operate in many
countries like
Germany, United
Kingdom, India,
Australia, Canada,
and Bangladesh.
They follow two
level distribution
channels.
Operate in many
countries like china,
India, Germany,
Indonesia, France,
Australia, Japan, and
Ireland.
Promotion Advertisement
campaign and
website promotion
Magazines,
televisions,
billboards and social
network includes
Facebook, twitter,
blogs, and shopping
portals.
Electronic Media
include
advertisement
campaign, social
media, and various
sponsorships.
Competitive Advantage
There are factors that are there in order to have a competitive advantage. This includes
Economies of scale, marketing of the differentiated products, guaranteed supply of the key
products, modification of production output, the establishment of an export market and ability
to pass on the production cost (Gallo, Antolin-Lopez and Montiel, 2018).
Consumers
Consumer analysis is essential in the modern day business. This is due to the fact that it helps
in understanding different aspects of the customers. It is effective in the case of making
segmentations and targets. The consumer’s preferences mainly depend on the favoured

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premium and healthier products over the traditional chocolates and the confectionery
(Konstantas, et. al. 2018). There is higher sale of the products that are high in fat and sugar.
There are various types of segments made by the company based on the type of consumers.
First is that there is an increase in the demands of the processed food that is processed by
natural ingredients. The natural product includes nuts, fruits, and coca. These kinds of
products are offer at higher prices and the consumers are willing to pay the higher price for
these products. Second is that there is increase in the demands for gyms and the fitness
canters is expect to increase over the years. This comes under the part of consumer buying
behaviour also there are various steps for the same. These are information search, problem
recognition, purchase, evaluation, and post-purchase evaluation (Laverty, et. al. 2018).
Changing market means the new changes in the demand for a particular product.
The major target market for the cited firm is the children. This is because it has products of
different taste that attracts children towards their firm. It is also because children have greater
interest in the chocolate products. Children at different ages like different types of chocolates.
It is further used as bakery items and is used as the gift items in many occasions. Therefore,
the producer needs to do some of the innovation in that field in order to attract the consumers,
so that they can sell the product to wider segments in the market (Loo and Leung, 2018).
Potential Impacts
There are various potential impacts on the industry and the Donald B’s business potential
venture. The potential impacts are:
 Demand for supermarkets and Grocery Stores: All the business operates a significant
amount of revenue from the sales to the supermarkets and the grocery stores. The
increase in demand ultimately reflects the consumer spending (Sueyoshi and Goto,
2018).
 Health Cautiousness: The people now days are very much aware of their health and
they want to use and purchase only healthy products. There is an increase in the
public awareness about the nutrition and health. This tends to affect the sales of
traditional confectionery and chocolate products and threatening the revenue growth
of the industry.
 Real Household disposable income: The income gives the reflection of the income
available for the individuals in any of the households that include generally the items
of beverages and food items.

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 Price of Competitors product: This means that the price of the competitors’ product
also affects the sales of Donald B’s venture. For example, if price of the competitor’s
product, is low as compared to their own product. The consumer will change the
product. The consumers will change the product due to its price (syracusecoe.org.,
2018).
 Demand from the food product manufacturing: Increase in demand from food product
manufacturers can result in an increase in demand for the industrial goods. They
generally use the Chocolate and Confectionery Manufacturing industry as an input
that generally produces the products from their own products.
 Trade-weighted Index: In the following case, alterations in the trade-weighted index
can have impact on the industry’s strong performance. An Australian dollar can make
the products comparatively inexpensive to purchase than that of domestically
manufactured products. This can increase the export prices, controlled demand from
the export markets and industries.
Summary of Analysis
Opportunities and Threats
Opportunities:
 Coverage: This means that the organization needs to increase the coverage area of the
brand. This means creating more and more consumers for the brand and maintaining
the relations with the regular customers (Thaichon, et. al. 2018).
 Increased Quality: This means the producers need to increase the quality of the
product means including more and more natural products in the process of
manufacturing of the product and this should be offer at the best possible price to the
consumers so that there should be a level of profit to both consumers and producers.
 Increase in Production: The production can be increase by improving the technology
in the process of making the chocolates. This will increase the production and supply
of the product, which will result in increasing the profit of the company.
 Health Cautious: The consumer preferences are changing due to the change people
are becoming more health cautious and the demand for the products are made by the
natural ingredients is increasing and the consumers are ready to pay a higher price for
the product made for natural ingredients (Singh et al., 2018).

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Apart from this they also should focus on the product differentiation as it is the base of
modern day marketing. This is also essential for attracting larger number of consumers
towards their products. They must focus on the path of research and development work so as
to bring flavours as per the demands of the consumers.
Threats
 Competition: The competition is a threat for every organization. The competitor’s
price, technology, and marketing strategy play a big role in the sales of the
organization. If we take the example of technology, if the competitor has the good
technology then he can sell the same product with the same quality at the lowest price.
 Local Development: The development of local economy serves as the biggest threat
for the organization. This means that only at the peak season time the people will
purchase the branded product but on other day’s they will purchase the competitors'
product. This will lead to ignorance of local manufacturers.
 Workforce: This is one of the major problems faced by many global organizations.
This means that every organization needs good employees for them and it is not
possible that people with the same level of education and experience are available in
all the countries. This is the reason that makes workforce a threat for the company.
 Huge Investments: The investment is a very big criterion for any of the business to
get profit. This means that all the creativity is converting into innovation only when
the funds are available with them.
Recommendations for Marketing Strategy
Recommendations are as follows:
 Target Business Segment: This means that the business should divide the market
into various segments. In this case, the organization can divide the market based on
types of uses of the particular product. The chocolates used in many places and on
various occasions, so the business should need to put some of the innovation in
diversifying their target business segment.
 Target Geographic Markets: In this case, the organization is a global organization
and the business can divide the market based on countries. By doing this, the

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organization can have different marketing policies for different countries and can
attract many consumers (University of South Australia. 2018).
 Target Consumer Market: This means dividing the market based on the consumers
available in the market, it will observe on the basis of age, income structure and
population density in the market of a particular country. In terms of age, producers
should market the product differently for kids and differently for young adults.
Conclusion
From the above report, there are many things that can be concluded. This report gives a brief
idea about the marketing mix of one of the important competitors. Macro-Environmental
analysis is very essential for the organisation along with latest trends that includes PEST+D
analysis and the potential impacts of the same being explain based on their business direction.
The major opportunities in regards to the business have been explained. Along with this
threats are also given, and lastly, one of the major recommendations is given that suggests
that the market can be segment according to different kind of consumer’s behaviours. These
include three types of segments, which are target business segment, target geographic market
segment, and lastly the target market segments. From the above analysis, this is been
observed that the company needs to have many advantages but it also includes many
disadvantages as well.

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