Roger’s Chocolates Case Analysis

By: AJ (Hejian) Liu, Nick Rosati, Rooby Fortulien, Tim Sprague, Alonso Vela, Jaime Simon

Suffolk UniversityEntrepreneurship 101

Agenda• Introduction

• Current Operations• Roger’s Product Profile

• External Analysis• State of Chocolate Market• Key Competitors• 5 forces: Threat Analysis, Bargaining power• Product Life-Cycle

• SWOT Analysis• Ratio Analysis• Recommendations• Conclusion

Current Operations• Head Office and Flagship store in Victoria, BC• 24,000 ft2 manufacturing facility in Victoria located 8km from

Head Office• 11 retail outlets owned and operated by Rogers’ Chocolates• Privately owned company with 5 board members• Awards:

• (2006) Winner of Superior Taste Award• (2000) Winner of Canada’s Innovative Retailer of the Year

Current Operations• Employee Base:

• Steve Parkhill is current president (2007)

• 110 non-unionized retail and production employees

• 20 employees in management, administration, and sales

• GOAL: To double or triple size of the company in 10 years

Roger’s Product Profile• Premium Hand-Wrapped Chocolates• Victoria creams, truffles, nuts and

chews, almond bark, nutcorn• Pure milk chocolate, dark chocolate,

white chocolate• Specialty items- chocolate covered

ginger, caramels, brittles, orange peel• Premium Ice Cream• Baking and fondue chocolates

State of the Market• Canadian Chocolate Market

• Market size: $167 million in 2006• Annual growth rate of 2%• Low Margins

• Premium Chocolate Market• 20% growth per year• High Margins

•Consumer Base:•Customers who looking for luxury and superior taste

Key Competitors• Godiva, Bernard

Callebaut, Lindt, Purdy’s

• All companies have excellent, modern packaging, but differ in price and quality

Threat Analysis• Threat of New Entrants

• Low threat level• Premium Chocolate Market is difficult for new companies to

enter• Require high level of capital assets, manufacturing know-how

• Decline in traditional chocolate market, growth in premium chocolate market• Well-established companies of traditional chocolate (Nestlé's,

Hershey's, Cadburys) move into premium market

Threat Analysis•Threat of Substitution

•High Level of Threat

•Consumers can buy other types of candies and sweets

•Numerous other brands of many different types of chocolates• High-quality, low-quality, organic

Bargaining Power • Bargaining Power of Suppliers=low• Many different suppliers• Ingredients for chocolate fairly common

• Bargaining Power of Buyers=low• Roger’s Chocolates has unique selling points and

unique products• Distinctive taste promote customer loyalty

Industry Rivalry •Industry Rivalry is mixed

•20% growth in premium chocolate market decrease rivalry

•High level of product differentiation decrease rivalry

•As more traditional chocolate companies move into premium market increase rivalry

Product Life Cycle• Currently, Premium

Chocolate Market nearing Maturity Stage of product lifecycle

• Still experiencing growth, but now abundance of competitors

Strengths• Competitive Weapon: High Quality Products• Long business history with experienced

management team• Knowledge of products, and manufacturing• Good advertising and brand reputation in

Victoria• Devoted and passionate employees • Excellent Retail Experience leads to repeat sales• Customer loyalty and well-established brand

Weaknesses• Weak brand awareness outside of Victoria• Old and Inefficient production process- no means of

measuring productivity• Demand forecasting- difficult due to seasonality of sales• Management and employees resistant to change• Inventory management and planning- products going out-

of-stock• Negative brand image from using forced/child labor made

materials from West Africa

Opportunities

• Increase in e-commerce• 2010 Olympics in Vancouver• Increase production capacity• Second Shift Possibilities• Joint Partnerships• Branch out to European and Asian markets

Threats• Economy and Demand fluctuations• Increase in competition• Consumer traffic- decrease in tourism traffic in

Victoria• Environmental and Human rights concerns• Aging consumer base- loss of loyal customers

Ratios2006

Current 3.08:1

Quick/ Acid-test 0.34

Debt-Equity 0.17

Shareholder’s Equity $5,672,552

Return on Sales 9%

Gross Profit 0.54:1

Recommendations: 5 Point Plan1. Improve internal production processes and update

inventory and forecasting technology2. Engage in aggressive marketing and advertising campaign3. Rebrand traditional image to reach out new client base

without compromising quality4. Maintain Customer Base with generous Rewards and

Loyalty Program5. Expand globally through partnership and joint business

ventures

1.Update Technology• Must update decades-old manufacturing equipment to reduce

cost of production and increase efficiency• Develop means of measuring manufacturing productivity for

future reference•Such data is essential to have for future growth

• Develop effective tools to forecast customer demand to avoid item shortages and extra production

• Current Net Book Value of Machinery: $317,544

2.Marketing Campaign• Increase brand awareness and recognition by increased online

advertising to higher income, quality conscious consumers• Adapt to changes in technology

•Develop an app- costs around $35,500•Effective advertising on social media less costly than traditional advertising

• Advertising Costs in 2006: $489,345 must increase

3. Rebranding Image• Advice from expert brand-image consultant:

• Dangerous to play it too safe, customers love edgy brands• Rogers’ quality already in high standing, make it appealing to a

wider range of people• Develop younger, sexier image while maintaining core design

elements and brand integrity (i.e. BMW, Cadillac)•Luxury products for young professionals, high-middle class

• Develop new packaging art: 4-5 new designs• Dominate Premium Chocolate Market

4. Loyalty Program• Leverage Rogers’ high quality, excellent customer service to

satisfy and maintain already loyal customers

• Offer special promotions, discounts, coupons to attract repeat buyers

•Chocolate of the month, personalized chocolate orders, corporate discounts

5. Expand Globally• Seek partnerships or joint ventures to expand company on global

level• Target the affluent all around the world: Europe, Middle-East, Asia

•China has 2,378,000 millionaires in 2013• Establish at least 10 retailers and production facilities all over the

world• Typical Retail Store (Sidney) costs $102,413 annually

•Once Rogers’ Chocolates globally renown, phone and online order will increase

Conclusion• Weaknesses old technology, poor inventory

management

• Advantages high quality premium chocolate, reputability, and customers’ loyalty

• Recommendations promote brand awareness, improvement of inventory management and expand

Thank You