Cowgirl Chocolates

Topics: Pricing, Marketing, Retailing Pages: 37 (7268 words) Published: May 20, 2009
An internationally celebrated ceramic artist, started Cowgirl Chocolates to provide some funding support for a yearly published arts magazine, High Ground, which she and her husband, Ross Coates, started in 1995. Her love of chocolates and hot and spicy foods spurred the idea of making hot and spicy chocolates to be sold in creative, artistic tins and packaging, which she labeled Cowgirl Chocolates. Her small business, begun in 1997, won a number of awards in fiery food competitions. While Cowgirl Chocolates grew steadily over its four years in business, it still generated only $30,000 in sales revenue in 2000, which was not enough to cover expenses. drained much of her personal savings to keep Cowgirl Chocolate in business. Her cash accounting methods and record keeping were not very sophisticated, although she seemed to have a good sense of her costs in production and raw materials and packaging. However, Marilyn took a “shotgun approach” to most of her marketing efforts and tried a number of activities to increase product demand. She allowed herself to make one “risky” financial move each year in her pursuit of profitability and increased sales. She made just one risky move in 2001—she took out a full-page ad in Chile Pepper magazine for $3,000.

Educational Objectives

Courses and Levels for Which the Case Is Intended

This case can be used in senior-level marketing management, business strategy, small business management, or entrepreneurship courses. Many of the questions are geared to a marketing management course, but the financial issues in Questions 9 and 10 can certainly expand the discussion to other classes integrating marketing and financial decisions for a small start-up business. The case illustrates how an entrepreneur with limited business skills, weak accounting/financial records, and an inconsistent marketing plan can quickly lead a small company into a spiraling financial downturn. However, a small business using a focused niche strategy with a unique product and a very motivated entrepreneur could potentially reach profitability if a distributor were found to push her product in an appropriate channel system.

Before discussing the specifics of the marketing and finance issues, it is best to begin with an analysis of the strengths and weaknesses of the company and a clear definition of the market (i.e., hot and spicy foods or the chocolate candy market) and the behaviors of the likely consumers of this unique product. The last question (Question 10) in the Instructors’ Notes focuses on whether it is time to end the business given its losses over the past four years. From a qualitative perspective, this question can be discussed from the information given in Exhibits 4 and 5 and from the cumulative responses to the marketing Questions 1 through 8. However, if this case is being used in a small business or entrepreneurship course, it is worthwhile to explore this question using a quantitative analysis. TN-3 and TN-4 provide deeper insight in resolving this issue through a percentage of sales pro forma analysis and through unit sales projections of key products.

Teaching Objectives

The case can be used in a number of courses. These objectives are all inclusive of an upper division marketing management course and a small business or entrepreneurship course.

To have students see the difficulties that arise when the market, customer, and perceived product benefits are poorly defined.

To have students critically analyze the “market opportunities and risks” which a niche product like “hot and spicy chocolate truffles” competes in—be it the chocolate candy market, the hot and spicy foods market, or both.

To have students analyze the marketing mix decisions for consistency so that the product can be “positioned” to the right target market.

To have students see the benefit of using the “total product view” to better define the product and its potential market....
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