Final Case Analysis
By: Kyle Couchois, Gregory Howard, Marc Schiller, John Sprenger
The primary problem of Cowgirl Chocolates is that the company has not established a target market for its product and identified its customers. The company specializes in the niche product of hot and spicy gourmet chocolate. According to the company owner, only about 15% of Americans are consuming hot and spicy foods and men are usually more receptive to her hot and spicy chocolate. Additional demographics are missing. Her product development was based on the input of her friends and family, which represents a skewed and too small sample of the population. In addition, Marilyn is cutting out the biggest portion of her target market by naming her product Cowgirl Chocolates and making the brand label May Lillie. Therefore, the branding is not appealing to men, which constitute the biggest portion of her target market. Before spending money on advertising, a target market has to be defined and the proper channels to reach that target market. Advertising without a clearly defined target market is inefficient and wastes company resources. Giving samples will help establish a base of awareness of her product and the acquired taste but this has an inherent cost involved. Secondary Problems
Marilyn’s lack of resources poses a great problem because without sufficient resources she will not be able to expand her business and increase sales. Cowgirl Chocolates lack the resources to become a large company they desire to become. Financially Cowgirl Chocolate does not have the resources to operate at full potential. The company is using revenue generated from Marilyn’s artwork, a small loan, and her personal savings to operate the company. Expenses completely overshadow her revenue of $30,000 while expenses were $50,000. This lack of funds give little to no room for promotional activity, a product that is as unique as spicy chocolates needs to have promotional abilities. Staff resources are minimal; Marilyn is the main source of production of her company. She does everything by herself, from the packaging and shipping the product to design and making the chocolate. This leaves Marilyn little time to expand to bigger ideas and meet with possible investors. She is devoting her time to the tedious work required to produce the product. Positioning of her product is the key to its success.
Another problem is the distribution channels that the company uses. The lack of sales deterred Seattle Chocolates from agreeing to manage the wholesale operations for Cowgirl Chocolates. “They were not interested in taking this on at the present time…because they were not really sure where the market was for the product.” Marilyn also knew she had to increase sales before Seattle Chocolates would consider such an arrangement. However, the company is lacking a clear understanding of where the product should be sold, and which distribution channel will bring the greatest sales. Currently Marylin’s strategy is to directly gain placements in retail stores one after the other. Marylin does not have the expertise and connections in distribution to gain product placements in stores. Marylin is currently trying to perform all tasks that a wholesaler would do such as promotion, negotiation, matching, physical distribution and risk taking. A wholesaler would perform those tasks better, cheaper, and more efficient and effective than Marylin ever could.One example of this is Marylin not being paid for her chocolates by a local vendor and having them returned after months. Although the Cowgirl Chocolates website is responsible for a third of total sales, it lacks crucial features. The website does not have the ability to track repeat customers and does not know how customers found her website. Although Marilyn advertises on other websites and portals there is no tracking and she does not know how...