The Divine Chocolate Limited has established a strong brand name since their foundation 14 years ago. Between 1999 and 2012 sales of Divine Chocolate have increased significantly. What is it that has given the Divine Chocolate brand the power that it has today and what do they better than their competitors? What could the company do better and where is its limit? . In the following part we want to answer these questions by conducting a SWOT- analysis. Thus, we will explain the competitive advantages of Divine Limited, expose their strengths and weaknesses and reveal the importance of customer equity.
In addition to that we want to give a forecast about opportunities and chances as well as possible threats. Strengths: The difference that sets Divine Chocolate apart from its mainstream competitors is the fact that they offer fairly traded products. By relying on a “clean” supply chainNext to that another strength is the production of high quality chocolate by using only the best ingredients. Their products are made to fit the consumers taste in the UK market. Divine Chocolate offers over 40 different products and keeps on adding new product lines continuously. (http://www. divinechocolate.
com/newsid/138/gold-award-at-the-grocer-own-label-food-drink. aspx) Furthermore, the company has developed a wide network with retailers all over the UK. Their products are available in all big supermarkets throughout the UK. Competitive Advantage: In order to elaborate on the term competitive advantage, we first want to clarify its meaning. In contrast to the regular strengths of a company, a “competitive advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. ” (http://www. investopedia. com/terms/c/competitive_advantage.
asp#ixzz2MIBOwLAP) Reasons for the recent success of Divine Chocolate require a deeper look into the companies operations and external relationships. A variety of competitive advantages throughout the supply chain have paved the way to the promising position of the company. First of all, Divine Chocolate has benefited from the support of several institutions from their early days on. The British Christian Aid organization, the Department Trade of the UK government, Comic relief (charity) and the National Westminster Bank have been responsible for “logistical, financial, and marketing support for the venture”.
(http://www. wipo. int/ipadvantage/en/details. jsp? id=2747). The massive external support put Divine Chocolate ahead of their direct competitors right away, therefore we see this as a firm specific competitive advantage. Secondly, Divine Chocolate has managed to develop a loyal and extensive supplier network by enhancing relationships with producers and suppliers. Building these relationships has taken a lot of time, effort and trust and are mainly based on the “guaranteed minimum Fairtrade price of $2000 per tonne” (http://www. divinechocolate. com/about/faqs.
aspx#relationship ) which is payed to Kuapa Kokoo and therefore allows them to pay fair wages to the farmers. In addition to that, Kuapa Kokoo receives an amount of $200 per tonne, which is used to improve living, health and education standards and Furthermore, 2% of Divine’s profit goes to the “Producer support and development”-department, which is concerned with the education of the farmers and their families as well as supporting local communities. Secondly, the company is known for having a unique business model, where the producing farmers hold 45% of the company’s shares.
Moreover, “Kuapa Kokoo aims to encourage the active and effective participation of women in decision making throughout the organisation”). Their cooperation rules state that “3 out of 7 of the elected board members of local Kuapa village societies must be women. ” (Devine Chocolate Social Enterprise Presentation. The business model plus the extensive inclusion of women into the structure of the firm enhances the reputation of Kuapa Kokoo and thus creates a strong customer value for Divine Chocolate Limited. Another main competitive advantage is their long-term alliances with strong and well-known partners, such as Starbucks and the Body Shop.
Both brands are very popular and add to the reputational value of Divine Chocolate. Another competitive advantage of the company is their customer equity. Customers base their decision whether to buy Fairtrade products or not on ethical and moral conviction. People who think they are doing the “right thing” when they buy Divine Chocolate are likely to keep on buying these products. Hence, creating a very loyal customer base. With the introduction of the sub-brand Dubble , the company tries to attract children and teenagers and strengthen customer loyalty from young ages on.
Weaknesses: In spite of the fact that Divine Chocolate uses its strengths and competitive advantages to build up a successful business, it still faces certain company internal weaknesses. Let’s begin with the cost issues. As said before, Divine Chocolate sells 100% Fairtrade chocolate. In order to receive the Fairtrade mark, a variety of requirements like minimum wages, community support etc. have to be met. Therefore Divine Chocolate has to deal with higher production costs, which raise the end price of the products.
As a consequence the customers of Divine Chocolate have to have to make a trade off between less price Competing in the chocolate market, which is mainly dominated by three companies (Divine Chocolate social enterprise presentation) is tough. Threats: A considerable threat is that Divine Chocolate solely relies on imports of cocoa from one particular country. Environmental catastrophes or skyrocketing cocoa prices could cause severe problems. However, almost all competitors have the same problem as the gross of cocoa products is harvested in West Africa.
and therefore have the same problem. The rising awareness and therefore demand of the Western population leads to more companies producing fairly traded products. Cadbury and Nestle’ recently introduced their own products with a Fairtrade label (http://schokolade. edelight. de/b/fairtrade-schokolade-kitkat-cadbury-machen-es-vor/). Those companies first have to gain consumer trust regarding ethically sensitive products but could pose a threat on the long run especially due to their economies of scale and scope that are very cost-efficient. Trends In The Global Chocolate Market
The global chocolate market is experiencing a steady growth of approximately 2 per cent a year over the next five years. Western Europe will remain on the top of the best biggest chocolate markets with a global market share of about 32% while facing only a small growth. In India, the chocolate industry is about to take over as the countries most demanded treat, which previously has been sugar candy. The market is expected to grow by 15% a year. The Chinese and Russian market are said to be the fastest growing chocolate markets in the world with an increase of 30 and 45% by 2016.
Trends In Consumer Behavior According to the KPMG research there are 4 major forces driving the growth of the chocolate market. Innovation, Health and Eventing. Sustainability: The demand for Fairtrade chocolate is increasing dramatically. The The classic chocolate tastes are going to remain best sellers on the market; however, the demand for exotic tastes will increase. Chocolate companies have to be more innovative than ever before. Especially in Japan and China, so-called specialty products are booming.
People are demanding gift-articles, E commerce of chocolate is also a rising factor in the industry. Chocolate lovers are more and more offered online buying options, so they don’t even have to make the way to the next supermarket or grocery store. Some firms like SWISS the famous chocolate producers from Switzerland have added a tool on their website, which allows customers to freely create and design their own chocolate and mix tons of flavours and ingredients (http://www. myswisschocolate. ch/en-uk/create-chocolate/schokolade-selber-machen. html) Opportunities: