Opportunities, Threats and Trends (SWOT)

¶ … Opportunities, Threats and Trends (SWOT) of producing and marketing a line of edible greeting cards. As the greeting card industry has been experiencing only slight to negative growth in revenues (Nigro, 2009) the differentiation aspects of edible greeting cards could potentially reinvigorate an industry experiencing flat to negative growth.

Strengths

Approximately 86% of American households purchase greeting cards each year with the average number of greeting cards purchased being 3 per store visit, with consumers making on average a series of ten trips throughout the year (Nigro, 2009). Greeting cards are deeply engrained in the approach Americans take to communication thoughtfulness to each other. This translates into a stable market base for edible greeting cards to expand on. Second, the traditional greeting cards market is in decline with a -3.6% growth projected for 2010 (Nigro, 2009). This however is a strength for edible greeting cards as the highly unique and differentiated aspects of the proposed card would be well received by greeting card retailers who are facing consolidation in 2010 and beyond.

Weaknesses

The greatest weakness of selling edible greeting cards is the need for an entirely new, more complex, and more costly supply chain to manage the chocolate, containers for confectionary products and new pricing structures. Edible greeting cards completely change the economics of an industry that always has razor-thin gross margins already and flat to negative growth (Garrett, 2007) (Nigro, 2009). A second weakness is the fact that the quality standards for selling confectionary and food products through card retailers will force an entirely new level of quality management in Hallmark Cards. It will transform a company, whose supply chain has been focused on paper products and the occasional stuffed toy into the food and confectionary business, including the need to manage shelf life and product quality over time. Rotation of edible greeting card inventory off the shelves will be critically important to make sure out-of-date cards are not sold.

Opportunities

The experience of purchasing and giving an edible card will be highly unique for a period of time and will communicate that one person feels much for the other. In this way the product experience, a critical aspect of any new product development (Pine, Gilmore, 2001) will be optimized through the giving of an edible card. Competitors to hallmark Cards have been creating customizable edible cards through configurators that take pictures anyplace them on the chocolate of the card. Mass customization can serve to define long-term value for a given product or service by customizing it to the need of the consumer (Pine, 2004).

Threats

The threats to the supply chain hallmark Cards will have to work with are major. This is uncharted territory for the company and they will need to get more involved in ensuring product quality of choclate is sufficient to sell the product. The second threat of costs of manufacture will also need to be closely managed and evaluated over time as well; as this is a business the company is not as familiar with as their greeting card business. The third dominant threat is from competitors who may choose to emulate them and work to overcome their market position in the traditional greeting card business with customizable, edible cards.

Trends

The trends on the greeting card business favor a highly differentiated novel product as an edible greeting card. Figure 1 illustrates the expected compound annual growth rate of greeting card sales. Note that 2010 is -3%. The traditional market is therefore excellently positioned to have a novel, highly differentiated product launched into it, a perfect market condition for edible greeting cards to gain distribution market share and reinvigorate sales of greeting cards in general.