The premium chocolate industry is having an intensive competition in Canada. As what Thompson has mentioned: “one important component of industry and competitive analysis involves delving into the industry’s competitive process to discover what the main sources of competitive pressure are and how strong each competitive force is” 2, Roger’s Chocolate is facing five competitive forces as demonstrated by Michael Porter 2: the rivalry among competing premium chocolate producers; the potential entrants to the premium chocolate segment; the degree of substitute products produced by other industries that may win over customers; the degree of bargaining power of buyers and the degree of bargaining power of suppliers. The strongest competition Roger’s facing is the industry rivalry. Few large players like Godiva, Bernard Callebaut, Lindt, Purdy’s, Laura Secord and Rocky Mountain, emphasizing different competitive products features to attract different purchasers. This is summarized in table 1.11. CompanyCompetitive features
Godiva6glitzy packaging; high price points; advertizing; variations in chocolate molding and chocolate colors; widespread distribution among retailers of gift item Bernard Callebaut7good quality; seasonal new flavor introduction; superior packaging with copper and gold boxes that can be customized; great seasonal displays; high price point; emphasized retail strategy Lindt8large variety; broadly distribution; cheaper in price; emphasized product for immediate consumption; high quality and purity of chocolate Purdy’s9successful historic product; large variety; broad locations; lower price point; good packaging and store displays; focus on group purchase and discounts offered for high-volume orders Laura Secord10good store locations; emphasized mall stores
Rocky Mountain11good store locations; franchise model; high price point Table 1.1 Industry rivalry and their products’ features
The strongest of the five competitive forces is usually the jockeying for position and buyer favor that goes on among rival sellers of a product or service 2. The intensive rivalry has implicated significant competitive pressure to Roger’s. As the premium chocolate market was growing at 20 percent annually 1, Rogers’ needs to focus on its products’ distinctiveness in order to differentiate itself in this industry and win over customers from the rivalry to survive and thrive. The weakest competitive force for Rogers’ is the bargaining power of buyers (customer and distributers). Approximately 50 percent of the company’s sales came from Rogers’ 7 retail stores located in the tourist area 12. This shows that Roger’s is very independent on distributors and could maintain main sales without relying on the distributors and other retail chains. Furthermore, 30 percent of sales came from wholesales accounts in independent gift shops, large retail chains, tourist retailer, corporate accounts and high-end food retailer. The remaining sales are generated from online, phone, mail orders and Sam’s Deli 1. Rogers’, therefore, with a broad scope of buyers, it is easy for Rogers’ to find alternatives when a customer is lost. The industry rivalry and the degree of substitute have great effect on industry attractiveness and the potential profitability of new entrants. Every chocolate producer is challenged to craft a successful strategy and fight for more profit for competing. The rapid growth and profit prospects are attractive enough to induce additional entry to this industry. Likewise, if the attractively priced substitutes are available, companies can produce cheaper versions of the product and still call it chocolate 1, more profitability will be generated thus also attract more new entrants to invest in this segment.
2.Key factors for competitive success
Key successful factors (KSFs) contribute to the financial and competitive success of a company. In the...