Roger's Chocolates (Rogers) was founded in 1885 and it is the oldest chocolate company of Canada. With such a long history behind it, "Roger's chocolates" is a well-established name in the business of premium chocolates in Victoria, British Columbia where the company does its business. Over the last two decades, the company' sales have grown 900% after changing ownership more than a few times. Steve Parkhill has recently taken over as the CEO of the company and has been given the target of tripling the size of the company within 10 years. The board of directors and the management have different ideas about Parkhill should achieve this target. He is now thinking of a growth strategy that would be approved by both the board of directors as well as the management.
Steve Parkhill wants to devise a growth strategy that would help achieve the target of tripling the size of the company in next 10 years. He has some options in front of him including expansion beyond British Columbia, online business, corporate gift service, reconsidering the cruise ship business and so on. Parkhill wants to adopt a strategy that would help achieve the target and also win support of board of directors and the senior management.
Problem support and Analysis:
Parkhill is in a tight spot because there is a dizzying array of possibilities available to him. He can choose any one option or adopt a combination of options to devise a growth strategy but in any case, he needs to come up with a strong plan as his new job as CEO depends on meeting the target given to him.
Growth is important because even though Rogers has been in good financial position for many years, it cannot completely become complacent as competition is getting fiercer in premium chocolate market. There are some very big players operating in this niche area including Godiva, Lindt, Bernard Callebaut and Purdy.
The target market is also rather exclusive since Rogers is not ordinary chocolate and is not cheap either. Many of its customers are tourists looking for a special souvenir and something totally Canadian to take back home with them. These are attracted through cruise ships that bring a large number of American tourists to Victoria and through 11 retail stores at various important tourist points. Sales are also generated through other channels including mail order and Internet. Wholesale accounted for 30% of the total sales. Other target markets include older generation Canadians who value quality over quantity and want an authentic Canadian product, corporations, resellers, and large retail chains.
The company does roaring business on special occasions like Christmas, Valentine's Day and special events time. For example it expected to do good business during Olympics 2010 which will attract a vast number of tourists to Canada. However with sales peaks being seasonal, the company also encounters production problems. China makes special tin boxes for gifts during peak seasons but sometimes is unable to supply them on time due to electricity problems in their country.
The company also needs to be careful about shelf life and size of the inventory. Thus Rogers has a long shelf life of six months that helps in keeping healthy but not unneeded inventory on site. The company is also able to meet various productions, supply and demand challenges by planning ahead and by having at least six-month stock available.
Competitors and Markets
Rogers is competing in niche market of premium chocolates which is fortunately not as congested as ordinary chocolates. Still it has some fierce competition from companies like Godiva, Lindt, Purdy and Bernard Callebaut. Being in the premium section has its advantages and disadvantages. The company doesn't need to worry about mushrooming ordinary chocolatiers and the variety they produce. Rogers can bring out few selected varieties on each special occasion and that is usually enough to cater to the needs and demands of its clientele. But it has its disadvantages too because there is only a limited section of the public that knows anything about premium chocolates or would want to purchase them regularly. And the fight to capture of attention of this small section of market is fierce. Every premium chocolatier would want to capture the attention of this segment and hence the chocolates have to be the best and unique each and every time.
There are four ways in which Rogers has been selling to its customers. The first is the retail route which has allowed Rogers to reach the highest number of customers as 50% of its total sales come from this route. The second is the wholesale route that accounts for 30% of total sales and is usually done through the resellers who would purchase in bulk for their gift shops, tourist shops, cruise ships etc.
The third is the online and mail order route. This has been very popular with the people who do not have access to a Rogers store and they usually cannot go to a store and get the chocolates on special occasions. For them, the online and mail order route works very well. It is also popular for American customers who are familiar with the Rogers name but still do not have access other than through online service.
The fourth route is the Sam's Deli, a restaurant style cafe that was purchased by Rogers to offer a total experience along with selling its chocolates. The deli is located in heart of Victoria and has been an institution for decades, however it has failed to generate as much business as Rogers had previously anticipated.
Parkhill has several growth avenues available to him.
a. He can take the business beyond BC to capture more locations within Canada. This would help Rogers gain instant sales growth since it is already a very well established in Canada with one problem: it doesn't have retail locations outside BC. If it enters other provinces, chances are that Rogers will see instant rise in sales and once it has tested one new area, it can expand to others. But for this to work, Parkhill must not try to capture all key areas at once. He should focus on establishing a good number of stores in one area, see the results and then expand. This would help in getting the most out of one area and it will also help him easily win the approval of the board and the management.
b. He can concentrate solely on expanding through Internet. He can not only offer chocolates and other Roger items through the company's own website but also allow other retailers and reseller to sell Rogers through their websites. This would increase sales manifold and with minimum overhead, the company can certainly get bigger and build on its customer base.
c. Parkhill can focus on developing the corporate gift market for Rogers' products. He can develop a strategy that would primarily concentrate on the expansion of gift accounts. He can offer discounts to companies who wish to give premium Roger items to its clients and business partners. Rogers can provide gift items on main corporate events like seminars, conferences, entertainment events etc.
d. The company can try to expand by only focusing on packaging part of the marketing mix. Since the company has always kept its packaging rather "homey," it has also failed to attract attention outside of Victoria. Customers in Victoria have a special connection with Rogers brand so they do not want to see a change in packaging but Godiva has been able to capture a much bigger market in less time due to very attractive glitzy packaging. The same approach can be adopted by Rogers to introduce a fresh look so while the taste would remain traditional and even the logo, the packaging on the whole would appear modern and fashionable.
e. Franchising is another available option that can not only bring in additional profits but also give Rogers greater exposure. Rogers can announce franchising opportunities to business minded people in Canada and America and then provide the interested and eligible franchisees with adequate training so they would understand the Rogers' heritage and traditions. This opportunity will work best if Rogers doesn't want to use its own resources -- both human and material- for expansion.
Out of all the alternatives available, what I find best for Rogers is to expand beyond Victoria and also choose a more attractive packaging. The combination of these two actions will help Rogers reach new heights of success as it will become a more recognized name beyond Victoria and will also be able to reach American people if Rogers decide to go across the border, even if it initially limits itself to California.
Attractive packaging would help Rogers attract younger customers because the company must try to understand that to depend on older generation of Canadians is a very risky proposition. It must also try to attract new customers and possibly younger customers who can spread the name more quickly…