Target Market
The Van der Steen Candy Company is a well established family concern that specializes in manufacturing and marketing of authentic, old fashioned hand-dipped chocolates. Their products priced at $13.95 per pound falls into the premium category and have a select, but loyal clientele. This family owned business which started operations way back in 1855 still relies on traditional methods of manufacture using the age old recipes that their founder used when he started his venture. The company relies solely on word of mouth advertising and had managed to achieve a healthy turnover of $ 677, 000 by the year 2005. In spite of increasing prices to keep up with rising raw material costs, the company has never seen a fall in its sales. Its current owner who inherited the business has been persuaded to keep the company has plans to expand its operations and plans to target a turnover of $1.5 million by the end of the current fiscal year. The estimated target market to achieve this projection is given below.
An estimate of repeat customers (from a random sample) shows that businessmen form a sizable chunk comprising nearly 25% of total customers. They purchase bigger quantities, mainly for the purpose of using as business gifts. This category should be given priority in selecting the target market. Businessmen with their networking skills can generate healthy word of mouth advertising. Since it is a premium product it would not make good business sense to target the general population. So the next focus should be on people who are in the habit of gifting special products to their spouses, fiancés or family members. Advertising should focus on this point. The next target should be families living affluent localities considering that affordability is a factor. The final target would comprise of the random buyers who could turn out to be a repeater in the future. The right target market will help the company correct the mid-year slump experienced during the month of July.
Product Mix
The study done by the current owner Joseph Van der Steen has revealed that competitors have a varied product mix in terms of package sizes and categories. Our client who has a varied product mix in terms of candy category currently markets only one package size of one pound. Hence, the product mix that the company should focus is not on category but on product size. Emulation and variation of competitor product mix should be attempted. The premium candy market has option of buying 2 ounce samplers and one pound or five pound packets. Samplers are essential because it can be used to attract new customers and eventually convert them to regulars. The one pound packet which is be the mainstay product size of the company should be continued. This will satisfy the regular clientele of the company and would be ideal in terms of size and affordability.
The five pound or its variations, which can be classified as ‘jumbo’ will have a market from businessmen. These packets (which should be priced to be most economical of the lot) should contain smaller packet of say half a pound or a pound each. Then, a jumbo pack will contain 10 half pound packets or five one pound packets. This will enable the businessmen to stretch their purchase into gifts for five to ten of their intended recipients. A product size heavier than five pounds does not seem to attract any type of customer. But any size in between the samplers and the jumbo pack could be introduced (for example, 5 ounces, half pound packets, two pound packets etc.). An experimental run with two or three of their most popular categories should be done initially. Once its success has been established the product mix in terms of product size should be extended to cover the whole range of candies produced by the company, including new recipes that will eventually be adopted or developed in the future.