BUSINESS LEVEL STRATEGY: Rocky Mountain Chocolate Factory Inc. (2008)

This case study examines the Rocky Mountain Chocolate Factory Inc.'s business strategy in 2008, with a focus on understanding the confectionary market's attractiveness and key success factors. The analysis highlights trends such as rising sales in the USA and average spending on chocolates and confectionaries, indicating significant profit potential with margins around 35%. Europe's high per capita chocolate consumption underscores its lucrative nature. Key success factors include understanding consumer tastes, analyzing market maturity, evaluating demographic influences like religion and income levels, and addressing global competition through retail strategies. The case emphasizes the importance of fair trade practices amidst growing health consciousness among consumers. This analysis provides insights into strategic considerations for thriving in the global confectionary industry.

Running head: BUSINESS LEVEL STRATEGY
Case study on ‘Rocky Mountain Chocolate Factory Inc. (2008): Recipe for Success’
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Answer 1
Attractiveness of the confectionary market
Confectionary market is one of the most attractive markets in the world. It is mostly
established in the North America and Western Europe. According to the report by Phan and
Vincelette (2008), the USA was the strongest market for the confectionary and chocolates
business in 2007. The confectionary businesses are now targeting the emerging markets in Asia,
such as, India, Japan and China due to the growing affluence for chocolates and confectionaries.
The attractiveness can be understood from the statistics of National Confectioners Association,
 USA candy markets experienced a hike in sales from $27.9 billion in 2005 to $29.1
billion in 2007.
 Average spending on confectionaries in USA was $93.92 and on chocolates was $52.16
in 2006.
 Profit margin was approximately 35% for the confectionaries in the USA.
 The data of 2002 shows, the Scandinavian and Western European countries are the
largest consumers of the cocoa and confectionary products, followed by the Americas.
 Average annual chocolate consumption of 8kg per capita makes Europe a lucrative
market.
 Tastes and preferences of consumers make this industry an attractive one.
The confectionary market was developed first in the Europe and then in the USA. The affluence
for the chocolates and confectionary products has been growing across the world since the past
century. Hence, with the increasing consumption of cocoa, variety of chocolates and different
types of confectionary products has made this industry a very lucrative one.

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Answer 2
Key Success Factors in the Confectionary Market
The success of the confectionary market depends heavily on the tastes and preferences of the
customers and it is important for confectioners to understand the trend of the preferences to
thrive in the industry. Premium confectioners of the world are Godiva, Lindt, Nestle, Harshey’s,
m&m, Rocky Mountain Chocolate Factory, Ferrero etc. and for a long period of time, these
companies have been ruling the world market. The key success factors are as follows:
 Understanding the trend and pattern of the customers’ tastes is the primary factor for
success.
 The nature of the market must be analyzed properly. The more mature markets prefer low
calorie, healthier products, while the new and emerging markets prefer the basic
products.
 Various demographic factors must be evaluated. Religion, culture, tradition, income level
and standard of living are the determining factors for the sales of the chocolates and
confectionary products. Some cultures prefer sweets while some prefer chocolates.
 The demand for gourmet chocolates and low calorie, healthier confectionaries are rising
in the developed markets.
 In the emerging markets like India and China, the confectioners have to compete with the
traditional sweets. Hence, demographic factors must be understood precisely.
 Fair trade practices should be adopted by the companies. Now a days, although the
consumers prefer to consume healthy dark chocolate products, they are also conscious

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about the exploitation of the cocoa farmers in the Western Africa and usage of child
labor.
 Competitions are increasing for the global chocolate and confectionary industry. Hence,
the companies must make good strategies for selling their products. The retail stores,
merchandise stores and their own factory outlets are reachable to the consumers and they
target to make the prices affordable to all (Phan & Vincelette, 2008).

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References
Phan, A., & Vincelette, J. (2008). Rocky Mountain Chocolate Factory Inc. (2008): Recipe for
success.