INTRODUCTION TO THE REPORT & THEME The basic objective of this report is to study about the Global market opportunities for Kandos chocolates & prepare a Strategy to capture it. I would like to take this opportunity to gratefully the Chairman & Board of Directors to give a excellent Opportunity work as International Marketing Manager & I would really enjoying to take the challenging task, which has been mentioned in this whole report. BUSINESS PROFILE 5th May 1962 was an evolutionary day for Sri Lankan confectionery industry due to the commencement of Ceylon Chocolates Ltd.
Prior to the establishment of Ceylon Chocolates Limited Sri Lanka was 100% relaying on imports for Chocolates. The main objective behind the pioneering activity of producing chocolates locally is to gain certain advantage on foreign exchange by increasing the local production as well as controlling the imports. In 1970 Kandos became one of most popular brand among the consumers. On the same year the millionaire industrialist Philip Upali Wijewardene acquired full control of Ceylon Chocolate Ltd.
During this time Delta confectioner products manufactured by Ceylon sugar company Ltd which was started by Upali Wijewardene1 in 1962 was the leader in sugar confectionery. In 1970 both these companies were amalgamated and the production of Kandos Chocolates and the Delta toffees were merged and started operating as Ceylon Chocolate Ltd. As the next avenue Kandos emerged into global market. Kandos became very successful brand in South East Asian Region. As a result of the above successes in order to take the business towards another step forward Mr.
Upali Wijewardena formed Upali Group of Companies and Ceylon Chocolate Limited became one of the subsidiaries. Upali Group of Companies established them as one the large conglomerate and also as a key diversified business enterprise in South East Asia. It was leading in the products such as Chocolate, confectionary, beverages, soap & detergents and also motor cars, Aviation, Electronics, newspapers, plantation became their key business. From the inception Kandos products were locally distributed by M/S Shaw Wallace & Hedges Ltd. In 1991 Ceylon chocolate Ltd had a mile stone of stepping into their own distribution channel.
The head office is located in Colombo & The factory and main stores are located in Kundasale. Another small warehouse is located at Homagama, in order to distribute the chocolates demand of the Colombo city and suburbs. At preset it has 68 Distributors island wide and also it has Delta Toffee plant, Wafer Biscuit manufacturing plant & Pudding manufacturing plants as well. There are two chocolate outlets which are named as “Kandos Shop”, which produce varieties of products using chocolates and there our plans for future developments as another trade mark operation. Product Range
Chocolates are categorized as dark, milk, compound, flavored, filled chocolates and couverture. There are many sub brands under these categories with different varieties. Basically the chocolates are classified as Cocoa butter chocolates (CB) and Non Cocoa Butter chocolates (NCB). In NCBs cocoa butter substitute (Hydrogenated Palm Kernel Oil) is used instead of cocoa butter. CB chocolates include Couverture-A, Super Blend, K-21 Collection, Milk and Fruit & Nut, Classic milk, while NCB chocolates include Super-10, Crispy, New Gen, Tak Tik, Kiddies, Super car and Couverture-B.
Each category has different varieties. PHASE 1: GOAL SETTING Vision To be the leader in our chosen field in the confectionery industry in Asia. Mission To be the leader in manufacturing & marketing best quality chocolate & confectionery products maintaining the highest brand values in a profitable manner to satisfy the needs of consumers. Long Term Objectives 1)To be the market leader in chocolate industry in Sri Lanka in year 2015. 2)Diversify the Business in to biscuits range, adding varieties of toffees & other confectionaries such as pudding, beverages etc in year 2020. )Re-brand Kandos in globally in year 2013. 4)Go to Cocoa Plantation through vertical Integration of Supply Chain Management in Sri Lanka in year 2012 & extend to overseas by year 2016. (China, Malaysia & Indonesia) 5)Re-build new manufacturing plants in China, Malaysia & Indonesia by year 2018. 6)Start Exporting of Biscuits & toffee range in year 2018. 7)Capture the Asian Market by year 2035. (Achieving 60% of Asian market) As go with company Vision, Mission & Long Term Objectives as an International Marketing Manager, I & my division also have following goals. )Execellarate Export market & do the preset Export Orders in effective & efficient manner. b)Re-branding as an International Brand in tourist countries such as Maldives, Seychelles, Mauritius, Singapore, Thailand, Hong Kong & Dubai from year 2013 as a Joint Venture agreement with respective local agents. Planning to capture 40% market share by year 2018. c)Gradually Increase the small Export Orders to countries such as India, Malaysia, Pakistan, China, Japan & Middle East countries by year 2013 onwards. Strategic approach to capture 20% market share by year 2025) d)Go beyond from Exporting & check feasibility of establish own plants from countries such as Malaysia, Thailand, Indonesia or Pakistan to act as true global player by year 2014. e)Capture 25% market share by year 2018 & increase up to 50% in year 2025 from above selected country, which we establish a plant. f)Using the same strategy & builds own manufacturing plants in selected countries, based on prevailing situation in the Asia. Year 2020 & beyond) g)Plan to capture 25% of market share in above mentioned countries in year 2025. h)Gradually positioning the Kandos brand in other Asian countries such as Bangladesh, Nepal, Philippines, Korea, Taiwan, Myanmar, & other Asian countries i)Ultimately we strategically approach to capture 50% of Asian Countries. Functional Strategies Business Strategy: Vision, Mission & Long Term Objectives’ of the Kandos as stated above. Marketing Strategy: How sales, marketing effort will support firm’s Business Strategy.
Operation Strategy: It support Business Strategy through specifies the policies & plans for using organizational resource. Strategic Decisions in operation involves products, services, process & technology, capacity, supply chain management, Product Design, Layout Planning & quality etc. Finance Strategy: Develop LT finance plan in order to support Business Strategy. In a simple term, corporate strategies are essentially about what the business wants to achieve. Strategy is about making high-level decisions & forms the management game plan for ….. •Satisfying customers (meeting customer needs) Running the business (organizing resources in the most efficient & effective way) •Beating the competition (strategies $ tactics to gain competitive advantage) •Achieving corporate objectives. Corporate business objectives are set at the high level & are quite distinct from any more detailed functional objectives set for the functional areas of a business. The position of corporate objectives in the hierarchy of business objectives can be illustrated as follows; BCG Matrix2 & Ansoff growth matrix2 can be used to explain how corporate objectives achieved through strategy as follows.
As far as International market is concern, Kandos is at Growth stage at the Product Life Cycle, since they are in the Export market. We have to decide the place in the BCG Matrix in accordance with stage in the Product Life Cycle. Only Coco Butter ranges chocolates that we are going to market, then we are in Stars level at the Local market. When we consider International market it is in cash cow level, we need to build up strategies to become Star level. GLOBAL STRATEGY FOR KANDOS IN ANSOFF MATRIX 1)Market Penetration – An existing product in an existing market.
Therefore to penetrate the market, the company will have to consider the following. •Offer competitive prices. •New minor changes – Improved taste, different tastes (such as 3 layer chocolates) •Sales promotional Activities & advertising. (Push & Pull Strategies’) •Positioning in alternative usages. (Gift packs, gift for lovers, promises chocolates) •Change the packaging. 2)Product Development – New Product to the Existing Market. •Develop white chocolate, Dark Chocolate. •Chocolate cake for wedding. •Re-launch Coco Powder packet for households. 3)Market Development – Existing Product in a new market. Presence in the global market. •Increasing the Chocolate consumption of the elders. 4)Diversification – New Product in a new market •Pure Coco Chocolate Biscuit to Middle East. •Energy Cocoa Drink. PHASE 2: MARKETING AUDIT FOR INTERNATIONAL MARKET & ASSUMPTIONS The marketing audit3 is a fundamental part of the marketing planning process. It considers both internal internal & external influences on marketing planning, as well as a review of the plan itself. Therefore it’s not involving at the beginning of the process, but also at a series of points during the implementation of the plan.
SWOT Analysis, PEST Analysis, Porters Five Forces Model & Value Chain Analysis are most widely used as a tool to marketing audit. In many ways the marketing audit clarify opportunities & treats, and allows the marketing manager to make alterations to the plan if necessary. In this phase as a International Marketing Strategy, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Lets consider the marketing audit under three key headings4; 1)The Internal Marketing Environment. 2)The External Marketing Environment. )A Review of our Current Marketing Plan. The Internal Marketing Environment. What resources do we have at hand? (i. e. Five “M”s5 ) I. Men (Labour) II. Money (Finance) III. Machinery (Equipment) IV. Minutes (Time) V. Materials (Factors of Production) •How is our marketing team organized? •How efficient is our marketing team? •How effective is our marketing team? •How does our marketing team interface with other organizations & internal functions? •How effective are we at Customer Relationship Management (CRM)? •What is the state of our marketing planning process? Is our marketing planning information current & accurate? •What is the current state of New Product Development? (Product) The External Marketing Environment. As a market oriented organization, we must start by asking – What is the nature of our ‘customer’? Such as; •Their needs & how we satisfy them? •Their buyer decision process & consumer behavior. •Their perception of our brand, and loyalty to it. •The nature of segmentation, targeting & positioning in our markets. •What customers ‘value’ & how we provide that ‘value’? What is the nature of competition in our target markets? Our competitors’ level of profitability. •Their number/concentration. •The relative strength & weakness of competition. What is the cultural nature of the environment(s)? •Beliefs & religious. •The standards & average levels of education. •The evolving lifestyles of our target consumers. •The nature of consumerism in our target markets. What is the demography of our consumers? Such as average age, levels of population, gender make up, & so on. How does technology play a part? •The level of adoption of mobile & internet technologies. •The way in which goods are manufactured. Information systems. •Making communications uses of technology & media. What is the economic condition of our markets? A Review of our Current Marketing Plan. •What are our current objectives for marketing? •What are our current marketing strategies? •How do we apply the marketing mix? (Including factors covered above in (a)) •Is the marketing process being controlled effectively? •Are we achieving our marketing budget? •Are realizing our SMART objectives? •Is our marketing team implementing the marketing plan effectively? •Levels of staffing. • Staff training & development. Experiencing & Learning. 1)SWOT Analysis STRENGTHWEAKNESSES •Brand Value •50 years presence in market •Good Rapport with Super market •Good Rapport with Government •High Quality •Loyal Employees•Did not change with Environmental changes •High Cost of Production, sp. Labor •Less Advertising & modern marketing approach •Problems in Distribution Channel, cause by above matters •Failure of facing competition •Slowly emergent of Quality issues OPPORTUNITIESTHREATS •High growth rate in country •Consumer pattern is changing for better in confectionary industry •Export pportunities, including Maldives, Middle east & Pakistan(SLPFTA) etc •Agricultural Economy is enhancing worldwide useful for cocoa plantation. •Emergent of New technologies•High competition(within other brand & industry in Local & Global brands) •Increasing trend of RM prices (Cocoa etc due to inflation, Exchange rate) •Encourage to new Entrants (Global through Free Trade Agreements, Horizontal integration of Super Market channel. Ex. Cargill’s have Kist, Cadbury) •Rules & Regulations in Food Industry 2)Porters Five Forces Analysis6 of the Kandos Bargaining Power of Suppliers’ )As an industry bargaining power of suppliers are very high, & as per the company it is also high. Examples are as follows. •Sugar Industry. Monopolies in the market in worldwide, new entrants are not possible at all. •Our Production is comparatively low; hence bargaining power is less possible in a world market as well as locally to some extent. Ex : Cocoa consumption is very low, considering world market. Coco Butter Substitute usage is low, compare with Ritzbery & Edna. Ritzbery has more bargaining power in Milk powder & Sugar with a synergy effect. )Price determination is high in local Coco beans suppliers; hence it is very price sensitive market. The risk is high comparatively since only Cocoa Beans processing Chocolate Company in Sri Lanka. 3)Packing materials are also playing major role, therefore Edna is doing it their under own control. Ritzbery’s strategy is concerning core business & outsources supporting activities as much as possible. We have waste experience is printing industry & we have to upgrade it to present culture. 4)Direct buying is widespread concept in Food industry, examples are as follows. Elephant House is doing their own Vanila plantation for Ice Cream & Ginger for ginger bear. -Munchee is buying iguru for Samaposha,soya for soya meet. 5)Continually conducting R & D for alternative suppliers & RM. -Ritzbery is doing continuously R & D for alternative suppliers for CBS & other RM too. -Producing Rice cookies, Kurakan biscuits. (by munchee) -Sweet treat (by Kandos) Bargaining Power of Customers’ 1)There is considerable bargaining power of customers in the world market & local since there are few operators are in the chocolate industry.
Further switching cost is almost nil, and customers consider taste, quality, attractiveness of packing, advertising & pricing. 2)Generally Sri Lankan consumers are very much price sensitive, so it is obvious all competitors are tend to price competitive, in that condense Customer bargaining power is very high. Ex: Offer product at Rs 5, Rs 10. 3)As a norm Producers are changing customers mind through introducing new Products. Munchee is introducing new Biscuits in regular basis. Ritzbery also doing New Product Development. 4)Advertising also tool to reduce customer bargaining power & maintain Brand & product Loyalty.
Ex : Cream cracker for small hungry. Elephant House ice Cream is new method of giving gifts. New Colours of Lovers, blue (by Ritzbery) Novel way to lovers’ gift, tropica coconut based chocolate by Ritzbery 5)Doing continually market research is helpful to identify customers mind & their consumer pattern changing. Threat of New Entrants 1)Chocolate industry is somewhat challenging industry, therefore there is limited chances to entering this market. Nevertheless there is trend to import & distribute in Sri Lanka, since it has less Business risk. )Diana is latest newcomer to the market & there is trend to enter this market by following Companies in Local & global. -Cargills. They are going to vertical integration Strategy & sell their own brands. Therefore there will be high probability to entering Chocolates market in the future. Ex : Kist, Walls Ice cream,Diana Biscuits (Kist Biscuits) , 3 Coin Beer company,Cargills meet balls, Kothmale Milk Products, Cargills detergents etc -Other players in the super market Industry are also following Cargills. Ex : Keels going to acquire Rich Life Milk
Arpico is selling their own brands Laufgh Sun up is going to start their own brands. -There is high probability to enter world class Chocolate in to Sri Lanka, since we are booming economy in the region & world, changing consumer patterns & emergent tourist industry etc. -There is also probability to enter chocolate market by confectionary manufacturing Companies as Diversification strategy. Ex : Nestle, Hemas, Maliban,Rigam, Daintee, Cherish etc Threat of Substitute Products 1)In Sri Lankan culture, most of the confectionary products are buying to give as a gift.
Therefore following products are competing with chocolate products such as Biscuits, Ice Cream, Gift Vouchers, Sugar, fruits, Fruit Drinks etc. 2)Further there are more products to be chosen by consumers as alternative to eat as a dessert or as snacks. These Products are also including Biscuits, Ice Cream, fruits, Fruit Drinks, Yogurt, Milk packet, Chocolates & many more. 3)As the result of that there is numerous treat to Chocolate industry, & we must focus on increasing chocolate consumption of the general public in order to hike Sales. Ex : Biscuit Consumption per Person has been increased due to advertising & competition.
Elephant House Ice cream has increased their sales volume through market development through branding it as “new method of giving gifts ’’. Sunquick also tried to do market development through branding it as “new method of giving gifts ”. Cream crackers is re-position as “small hungry” Samahan is positioned to use daily prevents from cold. 4)Knowing culture & consumer pattern through effective market research, we can create delighted customers rather than satisfying customers. Competitive Rival within Industry 1)Price competition is done by Edna, Ritzbery is compete through heavily advertising. )We mainly use our unmatched quality as a core competence to compete in the local market. 3)We are focusing to prevail in the market as a leader. 4)Growing global chocolates brands will be treat to Kandos. 5)Vertical & Horizontal Integration strategies used by the competitors to survive in the market. 3)Porters Generic Strategy7 of the Kandos In Sri Lankan Chocolates markets, the above categorization is as follows, according to Brands. Cost Leadership Differentiation •EDNA •RITZBERY •KINDER JOY Focused Low Cost Focused Differentiation •DIANA •DAINTEE •CADBURY •TOBLERONE FERRARI •KIT KAT Kandos does not have any particular strategy, hence theoretical it is categorized as Best Cost Provider &/or Stuck in the Middle. Because Kandos is not cost focusing, focusing differentiate a products to some extent & catering whole market, same as Edna & Ritzbery. SWOT FOR MARKETING OFFER A detailed SWOT analysis is to be carried out for the marketing mix8 of the company as shown below and the recommendations made in each component of the marketing mix will lead to formulation of a better comprehensive marketing strategy. ?SWOT for PRODUCT – Done for Coco Butter range in Singapore, Malaysia & Thailand
StrengthsWeaknessesOpportunitiesThreats Was there in 1980’s & have prior experience. Working capital problems. Emerging economies of the selected countries for chocolates. Already there is a presence of multinationals. Be in a market as unmatched quality of Coco Butter Chocolates’ in the Asian region. Difficult in Product adaptation in ASEAN region. There’s a lot of room to do value additions & product development in Chocolates’. High Competition. Excellent sales staff with a strong knowledge of existing productsNon Coco Butter Products are popular in those countries.
Trade Barriers for global companies. Recommendations ?Market penetration ?More product adaptation ?More value additions ?New product development ?SWOT for PRICE N/A ?SWOT for PLACE StrengthsWeaknessesOpportunitiesThreats Excellent R&D staff with a strong knowledge of existing products for Local marketControlling issues in overseas operationDistribution systems are good enough compare to other Asian countriesMultinationals have more bargaining power in the Distribution channel Have prior experience in Overseas DeliveryHaving own distribution mode will be more costlyCultural difference Recommendations Change distribution channel & outsource distribution ? Offer more sales commission to Agents ?Implementing Intensive strategy ?SWOT for PROMOTION StrengthsWeaknessesOpportunitiesThreats Promotion for just remind the customer mind towards Kandos brand. Less experience of handling promotional campaign in the selected countriesThe use of latest technology to develop advertisementsMultinational Companies Promotional Budget & effort is very competitive. The use of social media like facebook for online advertisingThe high costs to be spent for promotions in the selected countries compared to Sri Lanka
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