Marketing Report: Analysis of the Australian Confectionery Industry

This report offers a comprehensive analysis of the chocolate and confectionery industry in Australia. It examines the impact of changing consumer tastes and preferences, particularly the growing health consciousness, on the industry's profitability and growth. The report employs Porter's five forces analysis to evaluate the macro-environment and identifies key external variables. It delves into market segmentation and targeting strategies, categorizing the industry's offerings based on geographical, demographic, psychographic, and behavioral factors. The report recommends strategies to enhance competitiveness, such as product diversification and stronger branding, and concludes by emphasizing the need for firms to adapt to evolving consumer demands, including the introduction of healthier options and sugar-free products. This analysis is beneficial for understanding the Australian confectionery market dynamics.

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MARKETING MANAGEMENT
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Executive summary
The purpose of this report is to analyze the chocolate and confectionery industry in
Australia, the trends and the changes in the consumer tastes and preferences in the market and
the ways in which the changes in the consumer tastes and preferences impact the profitability
and growth of the confectionery and chocolate firms. The report analyzes the macro-
environmental analysis with the help of Porter’s five force analysis of the confectionery firm. It
identifies and explains the key variables in the external environment factors. Further, it identifies
the market segmentation and targeting of the industry and the firms on the basis of the products
and food items offered to the customers. Lastly, the reports recommends ways in which the firm
can maintain its competitiveness in the market and address to the changing needs and preferences
of the customers and concludes the report.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Macro environmental Analysis........................................................................................................3
Marketing segmentation and targeting............................................................................................5
Recommendations and conclusion..................................................................................................6
Conclusion...................................................................................................................................6
Recommendation.........................................................................................................................7
References........................................................................................................................................9

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Introduction
The industry of chocolate and confectionery has been facing various challenging due to
the changing in the consumer taste and preferences since the past five years. The Customers are
becoming highly health conscious. They are increasingly conscious about the amount of sugar
content and fat in the foods. These trends have negatively impacted the chocolate and
confectionery industry. The increasing trend of health consciousness among the customers has
put a strain on the growth rate and profitability of the organization (marketline.com. 2019).
Increased public awareness about nutrition and health has affected the confectionery products
and chocolates. The purpose of this report is to analyze the macro environment of chocolate and
confectionery shops, the impact of the key variables. It determines the market segmentation and
target customers of the organizations on the basis of product offered to each segment. Further, it
recommends way to address the problems and issues faced and conclude the report.
Discussion
Macro environmental Analysis
It has been analyzed that the increase in the trend of health consciousness among the
customers have negatively impacts the industry’s revenue. According to Fedoseeva (2013), there
has been increase in the real household disposal income of the consumers; therefore there are
high chances of consumer spending on the confectionery food items and chocolates. There has
been increase in the demands from food product manufacturer which results in greater demand
for the confectionery and chocolate industry. There has been rise in health consciousness among
the customers; they have opted for premium, healthier and more sustainable food products

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(Haskelberg et al. 2016). This change in the social trend has reduced the profitability of the
confectionery and chocolate industry. It has been predicted that the supply of cocoa is declining.
Five force analysis
According to Gabriel and Menrad (2014), Michael porters five force analysis, can be used to
analysis of the external environment situation of the confectionery and chocolate shop. The five
force analysis provides an understanding of the internal competition in the market, the barriers to
entry in the market, the bargaining power of the customers and the suppliers.
 Buyer power: The buyers of confectionery and chocolate have a moderate degree of
power as there are large numbers of confectionery stores ranging from small independent
retailers to large (Chandrasekaran et al. 2015). There are huge super markets and other
hyper chain which offers the same confectionery and chocolate items. Therefore, the
bargaining power of the customer is higher in the market. The convenience stores and
other supermarkets have high degree of branding in the market. Therefore, consumers are
influenced more by the branding of the large supermarkets.
 Supplier power: According to de la Fuente-Mella, Fuentes and Leiva (2019), the major
suppliers of Chocolate and confectionery shop includes the cocoa farmers, and the
suppliers of other raw materials for making the confectionery food items such as sugar,
butter, cocoa liquor and cocoa power. The power of suppliers is low in the market due to
the change in the tastes and preference of the customers. The price of the sugar and other
materials remain low (Haskelberg et al. 2016). There is a huge fall in the sugar output
and has resulted in the global rebound of the price of sugar.

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 Degree of rivalry: According to Riesenberg et al. (2019), there is a moderate degree of
competition in the Confectionery market in Australia. The confectionery shop tends to
face competition from the large manufacturers and stores with varied and vast range of
offerings, string branding. This highly intensifies the level of competition in the market.
 Barriers to entry: Majority of the products are mass marketed, it requires high amount
of capital in order to set up the confectionery and its production facilities. The
confectionery products and chocolate items need to be products in substantial volumes in
order to gain more profits. However, as mentioned by Haskelberg et al. (2016), it is
possible to enter the market in smaller scale. There are little regulations in the Australian
market and low fixed costs which facilitates the entry of new firms in the market.
However, there are potential risks and presence of competition with the large retailers and
supermarkets increases the barrier to entry (Gabriel and Menrad 2014).
 Availability of substitute products: The substitutes of the confectionery and the
chocolate items include fresh fruits, dry fruits and savory snacks. The presence of these
substitutes reduces the profitability of the firms (Gabriel and Menrad 2014). Therefore,
there are high threats from the substitute products especially considering the change in
the consumer tastes and preferences.
Marketing segmentation and targeting
Chocolate and confectionery shop primarily offers products such as mints, candies, lollies,
marshmallows, fruits and nuts, muffins, cakes, chocolate shakes and others. It also offers huge
range of food products and items which are wrapped by sugar and chocolate along with other

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fillings. The market segmentation is done on mainly four bases that are geographical, behavioral,
psychographic and demographic (Ibisworld.com.au. 2019).
Geographic segmentation: Chocolate and confectionery shop targets the local buyers
throughout Australia. It aims to offers its products in all the seasons throughout the years.
Demographic segmentation: The chocolate and confectionery food items are targeted to all the
age or income groups. However, it especially targets the children within 12 years of age. The
lollipops and candies, mints and marshmallows are targeted especially to the children below the
age of 12 years (Handojo, Triharyogi and Indarto 2019). Other chocolaty items such as creams,
muffins, cakes and sweets are targeted mostly to the children above the age of 12 years. It also
targets the adolescents and the young adults for food items like fruits and nuts, chocolate shakes
and milkshakes (Riesenberg et al. 2019). The other options such as chocolate baskets, sweet box
and candy bouquets are targeted for the adults especially for gifting purpose like birthdays,
anniversary and weddings. It aims for all the income group earners.
Psychographic segmentation: The firm targets the people who are highly passionate towards
chocolate and other sugary items. All the chocolate and confectionery food items are targeted for
the customers who remain busy throughout the day at work or school and prefer treating
themselves with the offered food items for refreshments (Riesenberg et al. 2019).
Behavioral segmentation: Based on the analysis, the firm can target the customers on the basis
of occasion, usage, loyalty and benefits sought (Evan 2019). The fruits and nut basket, candy box
and chocolate bouquet can be targeted to the customers who can use the products for gifting
purpose and for the customers who are loyal towards the firm’s offerings.

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Recommendations and conclusion
Conclusion
Therefore, from the above analysis, it has been identified that the operators in the
chocolate and the confectionery market have been facing various issues and challenges over the
past five years due to the change in the taste and preference of the customers. It has been
analyzed that there has been a growing awareness about the healthy products and it is anticipated
that there might be a rise in the trend of health consciousness among the customers in the next
five years. The increased awareness about the health and nutrition has negatively impacted the
sales and profitability of the firm. The report has analyzed the macro environment of the firm. It
has used Porters five force analysis to analyze the macro environment such as the bargaining
power of the customers, the bargaining power of suppliers, degree of competition in the market,
barrier to entry and availability of substitute products in the market. Further, the report has
recommended target and segmentation of the firm.
Recommendation
It is highly recommended that the chocolate and confectionery firm must increase the
range of products offered to the customers. According to Gabriel and Menrad (2014), the firm
can offer alternatives such as no sugar snacks items, salty biscuits, sugar-free beverages, no
artificial color in the creams and other food items or products addressing the needs of a diabetic
patients. It must address the trend of health consciousness among the customers by introducing
snacks with health benefits such as dry fruits, biscuits with less sugar (Haskelberg et al. 2016).
Further, it can include healthy ingredients such as vitamins in the food content. Moreover, it
must focus more on branding within the market. It needs to invest heavily in advertising and
branding the product especially about the new offerings of the firm (Riesenberg et al. 2019).

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Having a strong established brand in the market can help the firm to mitigate the power of the
consumers to some extent. It is also recommended to source the ingredients and the raw
materials from around the world; this will help the firm to increase the power of the suppliers in
the confectionery market (Evan 2019). It can implement a diverse product lines such as fruit
juice items in the product range. It can alleviate rivalry among the existing firms in the market.
Further, it can improve the packaging of the products to attract the customers along with the
sugar free innovations, pure dark chocolate items without sugar.

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References
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Chandrasekaran, M., Basheer, S.M., Chellappan, S., Krishna, J.G. and Beena, P.S., 2015.
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de la Fuente-Mella, H., Fuentes, J.L.R. and Leiva, V., 2019. Econometric modeling of
productivity and technical efficiency in the Chilean manufacturing industry. Computers &
Industrial Engineering.
Evan, A.R.A., 2019. Factors affecting consumers buying confectionery products (Chocolate).
Fedoseeva, S., 2013. (A) symmetry,(non) linearity and hysteresis of pricing-to-market: Evidence
from German sugar confectionery exports. Journal of Agricultural & Food Industrial
Organization, 11(1), pp.69-85.
Gabriel, A. and Menrad, K., 2014. The Costs of GM and Non-GM Co-existence in Processed
Food Systems–Demonstrated for the Cases of the German Supply Chains of Chocolate and
Frozen Pizza. Journal of agricultural & food industrial organization, 12(1), pp.141-158.
Handojo, L., Triharyogi, H. and Indarto, A., 2019. Cocoa bean shell waste as potential raw
material for dietary fiber powder. International Journal of Recycling of Organic Waste in
Agriculture, pp.1-7.
Haskelberg, H., Neal, B., Dunford, E., Flood, V., Rangan, A., Thomas, B., Cleanthous, X.,
Trevena, H., Zheng, J.M., Louie, J.C.Y. and Gill, T., 2016. High variation in manufacturer-
declared serving size of packaged discretionary foods in Australia. British Journal of
Nutrition, 115(10), pp.1810-1818.

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Ibisworld.com.au. 2019. Market Research Reports & Analysis | IBISWorld AU. [online]
Available at: https://www.ibisworld.com.au/ [Accessed 17 Sep. 2019].
Jylhä, P., 2018. Margin requirements and the security market line. The journal of finance, 73(3),
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marketline.com. 2019. Chocolate Confectionery in Australia - Marketline Report Store. [online]
Available at: https://store.marketline.com/report/ohme3057--chocolate-confectionery-in-
australia/ [Accessed 17 Sep. 2019].
Riesenberg, D., Backholer, K., Zorbas, C., Sacks, G., Paix, A., Marshall, J., Blake, M.R.,
Bennett, R., Peeters, A. and Cameron, A.J., 2019. Price Promotions by Food Category and
Product Healthiness in an Australian Supermarket Chain, 2017–2018. American journal of
public health, (0), pp.e1-e6.