For the purpose of this case study assignment we will consider the commercial and legal position of Choc Deluxe, a fictitious company,in its role as a small scale specialist chocolate company where ‘quality’ and the inclusion of only organic productsis its unique selling proposition (USP).
The company’s products have brand loyalty (the propensity to repurchase a brand) from its customers who are willing to pay the ‘premium’ price that are attached to each of the chocolate products, and business looks good. Choc Deluxe is a player in a global industry worth $80bn a year and rising “because of emerging markets like India and China, combined with anticipated economic recovery in the rich North (Europe after the Financial Recession of 2008), have led to industry forecasts of a 30% growth in demand to more than 4.5 million tonnes by 2020” . That sounds like good news. There is a problem however with regard to availability of cocoa, the main ingredient to making chocolate. There is not enough cocoa being grown to meet increasing demand. Additional new plantings are going to take 5 years until they are ready for harvest, so until then, as supply decreases and demand goes up so does the price of the product. This is OK if chocolate is regarded as a basic necessity and thus people are prepared to pay for it,but chocolate is not such a product. There is only so much that a price can be increased, even to a loyal customer base for the special Criollo bean based products before sales decline. To customers who are not so much concerned with price this would normally be good news for the company but Choc Deluxe can’t source enough of the Criollo cocoa beans anyway, which presents a problem.
Choc Deluxe has a large order already in place to supply a top end department store with luxury chocolate products for Christmas,but there are not enough Criollo beans available to meet the order. Choc Deluxe executive management therefore decide touse the more common Forastero beanfor 20% of this particular product range. The 80% Criollo/20% Forastero combination had already been tested by the Marketing Department with focus groups, and no change to the usual taste had been noticed.
Discussions were also held with the high value department store buyer about the ‘small’ substitute, and as long as the taste hadn’t been affected and the product packaging description
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