Summary
Cowgirl Chocolates is a small enterprise founded in Moscow, Idaho. Over the years of the company’s operation, its owner, Marilyn, didn’t achieve significant results in the promotion of her products and attraction of potential customers although, for some time, the chocolates were demanded in a few of the distribution points and were actively purchased via the online shop. Nowadays, the company incurs losses, and Marilyn needs to develop a strategy to sustain her business, survive in the competitive market, and increase revenue.
Alternatives
One of the potential directions for the development is shifting towards self-production. The collaboration with the large producers such as Seattle Chocolates is rather costly for Cowgirl Chocolates; production, wrapping, and packing expenses are not well correlated with the product demand. The second alternative is the development of Cowgirl Chocolates’ website. It was mentioned that about one-third of total purchases were made through the company’s online store. Therefore, e-commerce is a prospective direction for Marilyn to follow.
The placement of the advertisement in the Chile Pepper magazine is a good idea. Cowgirl Chocolates has a diverse and original product range; its pack design has won several awards. Thus, the promotion has a potential for a significant success. Nevertheless, Marilyn needs to identify its target audience and product segment because it will help her to increase production efficiency and avoid unnecessary losses.
Key Decision Criteria
The major criterion is cost-efficiency. At the current stage, the production of some items, such as Gift Buckets, involves excess costs – the average packing cost for one gift set is $5.25 (Exhibit 2 Cowgirl Chocolate Product Offerings with Price and Cost Figures, page 591). High wholesale prices result in high retail prices which lead to the decrease in product demand.
Another criterion is the quality increase. Marilyn noticed that sometimes the quality of packing and wrapping provided by Seattle Chocolates is unsatisfactory. Moreover, the quality of chocolate produced by the company is not the best in the market. But quality is one of the basic customer values, and the increase in quality indicators may help to increase product attractiveness.
Analysis
Self-production and e-retail may help Marilyn to increase cost-efficiency and product quality. These alternative directions for the development require the reduction of production volumes. At the initial stage, it is better to offer a few options to attain stability in business. Moreover, the decrease in production volumes and the narrowing of product range may help to increase product differentiation and make the brand characteristics more distinctive and recognizable.
The product differentiation will also be increased after the placement of the advertisement. In this way, Marilyn will directly address the audience of the potential consumers who will likely be interested in purchasing of Cowgirl Chocolate products. The company already has a good aesthetic base in product design which should be applied. Moreover, the development of thematic and more elaborated website may increase the customer attraction and, at the same time, may help to track which items are more demanded. This information will be useful in design and development of new options.
Recommendations
Self-production and e-commerce can be efficiently implemented in case the target audience is identified, and the product range is narrowed according to the customers’ preferences. Marilyn can focus her attention of the production of the spicy chocolate and withdraw the sale of the large gift sets because they are not demanded. Marilyn can hire a small working team whom she would be able to control. The ability to monitor the process of production and the qualified or less expensive workforce facilitate the achievement of cost-efficiency and increase in product quality. In this way, Cowgirl Chocolates may build a solid foundation for the high customer and product value creation.
Works Cited
Cravens, David, and Nigel Piercy. Strategic Marketing. Boston, MA: McGraw-Hill, 2006. Print.