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Her product development was based on the input of her friends and family, which represents a skewed and too small sample of the population. In addition, Marilyn is cutting out the biggest portion of her target market by naming her product Cowgirl Chocolates and making the brand label May Lillie. Therefore, the branding is not appealing to men, which constitute the biggest portion of her target market. Before spending money on advertising, a target market has to be defined and the proper channels to reach that target market.
Advertising without a clearly defined target market is inefficient and wastes company resources.
Giving samples will help establish a base of awareness of her product and the acquired taste but this has an inherent cost involved. Secondary Problems Marilyn’s lack of resources poses a great problem because without sufficient resources she will not be able to expand her business and increase sales. Cowgirl Chocolates lack the resources to become a large company they desire to become.
Financially Cowgirl Chocolate does not have the resources to operate at full potential. The company is using revenue generated from Marilyn’s artwork, a small loan, and her personal savings to operate the company.
Expenses completely overshadow her revenue of $30,000 while expenses were $50,000. This lack of funds give little to no room for promotional activity, a product that is as unique as spicy chocolates needs to have promotional abilities. Staff resources are minimal; Marilyn is the main source of production of her company. She does everything by herself, from the packaging and shipping the product to design and making the chocolate.
This leaves Marilyn little time to expand to bigger ideas and meet with possible investors. She is devoting her time to the tedious work required to produce the product.
Positioning of her product is the key to its success. Another problem is the distribution channels that the company uses. The lack of sales deterred Seattle Chocolates from agreeing to manage the wholesale operations for Cowgirl Chocolates. “They were not interested in taking this on at the present time…because they were not really sure where the market was for the product. ” Marilyn also knew she had to increase sales before Seattle Chocolates would consider such an arrangement. However, the company is lacking a clear understanding of where the product should be sold, and which distribution channel will bring the greatest sales.
Currently Marylin’s strategy is to directly gain placements in retail stores one after the other. Marylin does not have the expertise and connections in distribution to gain product placements in stores. Marylin is currently trying to perform all tasks that a wholesaler would do such as promotion, negotiation, matching, physical distribution and risk taking. A wholesaler would perform those tasks better, cheaper, and more efficient and effective than Marylin ever could. One example of this is Marylin not being paid for her chocolates by a local vendor and having them returned after months.
Although the Cowgirl Chocolates website is responsible for a third of total sales, it lacks crucial features. The website does not have the ability to track repeat customers and does not know how customers found her website. Although Marilyn advertises on other websites and portals there is no tracking and she does not know how effective each channel is, and how many customers it brings to the site. There is no knowledge what search terms customers that found her site were using. That way there is no data on whether the Cowgirl Chocolates website is competing with other chocolate companies, spicy foods, or online gift stores.
The website would be the cheapest way to gather market research and further identify a target market. An additional problem is Marilyn’s pricing strategy. Cowgirl Chocolate is premium gourmet chocolate in special packaging that makes it stand out from the rest of the competition. Furthermore, it is a new and unusual product. Marilyn states that she is unsure on how to price her product. Cowgirl Chocolate is sold in overpriced spicy food specialty stores, upscale gourmet food stores, and even the grocery stores. Marilyn could not identify a trend on how pricing affect sales.
This does not come as a surprise because the product is new and customers are still unaware of it. Cowgirl Chocolates should be sold at a premium price. However, in the current stage of the product cycle the company needs to create customer trial. The way to accomplish this is to offer promotions, for example by offering in store promotions, coupons, coupons and/or mail in rebates. Again, those tasks should be handled by a wholesaler. Furthermore, Cowgirl Chocolates advertising is ineffective since there is no clear defined target market.
Marilyn advertises randomly in different magazines using ads created by a friend and not a professional advertising agency. Marilyn is unsure herself if the advertisement will actually increase sales or not, even though it will cost thousands of dollars. Again, market research is missing to direct advertising to the right channels and reach the target audience, with the right ads that will increase customer trial. The company currently advertises the product year round, when it should concentrate more on advertising during the peak seasons of Christmas and Valentine’s Day.
The company needs to have more product information in the advertisements. Recommendations To establish a target market we recommend that Cowgirl Chocolate should add more features to the website. The website should be able track how customers found the website, track orders and repeat customers, and gather such information as demographics. By tracking purchases, Cowgirl Chocolates will be able to send out promotional emails, for example customers could be informed about a special sale, given a discount code, or just be informed about new product creations or gift ideas.
Additionally, a short survey should be added after the purchase is completed to gather valuable customer information (see appendix for sample survey questions). This would be the cheapest method of doing market research and establishing a target market. By tracking customers, the company will also determine who its main competitors are. Cowgirl Chocolates could be competing with other premium chocolate manufacturers, spicy packaged food, or gift websites. Another advantage of using the internet as a distribution channel is that Cowgirl Chocolates can be sold internationally.
Markets in other countries can be entered with little to no initial investment. This will again offer opportunity to feel out markets in other countries that could be physically entered at a future point of time. Secondly, Marilyn should put effort on finding a wholesaler for her product that will take over crucial tasks that she is currently trying to perform all by herself. A good wholesaler will not only take risk of Marilyn’s hands by buying greater quantities at once, but will also fight for placement in stores and offer promotions to boost initial sales.
A good wholesaler will select the right distribution channels and retail outlets using years of experience and expertise that Marilyn is lacking. Using a wholesaler will free up some time for Marilyn and allow her to concentrate on other aspects of her business like product creation and design. Half of the product portfolio currently only constitutes for 5% of total sales. These products should be discontinued since a wholesaler will most likely not carry them.
Using the market research gathered from the Cowgirl Chocolate website, Marylin can effectively advertise by choosing the right channels and targeting the right customers. An advertising budget can be set apart and adjusted to the seasons with the highest sales. More emphasis should be placed on seasonal advertising such as during Christmas, Easter, or Valentine’s Day to take advantage of the gift aspect of Cowgirl Chocolates. We recommend that Cowgirl Chocolate sell their chocolate to spicy food restaurant for them to give to customers at the end of their meal.
This would create more product awareness among consumers who already enjoy spicy foods. In addition to the internet and wholesale business, this can be a third distribution channel. Finally, we recommend that Marilyn should capitalize on effective free marketing, such as a local newspaper or news programs and have them run a story on her product. The cookbook would be a good form of promotion for her product. Marilyn could use it to generate more customer awareness and include recipes for different uses of the Cowgirl Chocolate.
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