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Haighs Chocolates

An Analysis on its Marketing Practices

Submitted by: Sukanya Fuad


La Trobe ID: 18746846

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Executive Summary

This report on Haighs Chocolates- An Analysis on its Marketing Practices opens up with an

overall introduction on why this study has been conducted, including the purpose,

methodology, scope and limitation associated with it. The second topic is the background,

which briefly talks about the chocolate confectionary industry on a global scale with an

overview of the sustainability practices conducted by Haighs Chocolates. Afterwards, topic

three breaks down the marketing mix of Haighs on Product- the range of varieties offered to

the customers; Price- the pricing strategy implemented based on production; Place- how

Haighs believes in operating directly through their own retail outlets and Promotion- the

strategies to build customer equity together with supporting statements by other notable

authors. Topic four focuses on the competitor analysis in terms of marketing mix by a direct

player such as Kennedy & Wilson and an indirect player such as Lindt Cafes and Shops and

compares the contrasting differences as well as the parallels in the implemented marketing

strategies, with the additional reasons behind conducting such a study helping any firm to

stay one step ahead. Topic five recommends some strategies whereby Haighs can turn its

weaknesses such as premium pricing into strengths and utilize the external possibilities such

as expanding overseas to its benefit, relating to the SWOT analysis and Positioning Chart in

the Appendix, and keeping the marketing mix as the base. And finally topic six concludes

how Haighs needs to tackle some of future challenges with innovative measures in order to

keep going on the path of success.

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Table of Contents

1.0 Introduction..........................................................................................................................4
1.1 Origin of the report.......................................................................................................4
1.2 Objective of the report..................................................................................................4
1.3 Methodology.................................................................................................................4
1.4 Scope.............................................................................................................................4
1.5 Limitation......................................................................................................................5
2.0 Background..........................................................................................................................5
3.0 Marketing Mix: Haighs Chocolates....................................................................................6
4.0 Competitor Analysis.............................................................................................................9
4.1 Kennedy & Wilson........................................................................................................9
4.2 Lindt Cafes and Shops................................................................................................10
5.0 Recommendations..............................................................................................................11
6.0 Conclusion..........................................................................................................................13
7.0 References..........................................................................................................................14
8.0 Appendix............................................................................................................................17
8.1 SWOT Analysis............................................................................................................17
8.2 Positioning Chart........................................................................................................20

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1.0 Introduction

1.1 Origin of the report

This report has been conducted partly for analysing and relating marketing theories such as

the marketing mix, etc. with real life practices at Haighs Chocolates as well as for the

completion of the course - Sustainable Marketing and Management - at La Trobe University.

Each student has been assigned to submit a report by comparing their findings with the

marketing theories and observe how they can relate to sustainable practices.

1.2 Objective of the report

The objectives are stated below -

1. To have comprehensive knowledge on Haighs Chocolates


2. To identify the strategic decisions it has taken in terms of marketing its products and

services
3. To provide consistent descriptions of results while relating them with marketing

theories
4. To recognize the sustainable practices undertaken by the business

1.3 Methodology

Related data for developing this study has been acquired through secondary sources such as

company and other websites with the support of journal articles.

1.4 Scope

This study gives a preview of the approaches employed by a well-known family business and

conveys views and recommendations to be taken into account for future references.

1.5 Limitation

The only limitation faced while preparing this report was the time constraint due to increasing

workload at the end of the semester.

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2.0 Background

Despite the fact that the Global Candy and Chocolate Manufacturing industry has shown

sluggish behaviour in the recent years due to the growing number of health conscious

consumers, developed markets in Europe and North America remain the prominent producers

in the world with more emerging markets in Brazil and Latin America becoming significant

in terms of growth. The Australian Confectionery Manufacturing industry that constitutes of

chocolates, candy, etc. has shown similar movement. However, some successes have been

noted in terms of premium, artisanal and niche products and they are expected to perform

better as the market for bagged selflines/softline products is highly saturated and owing to the

value-adding nature of premiumisation.

The top five manufacturers in the world chocolate confectionery industry in terms of

company shares constitute of Mars Inc. (14.5%), Mondelez International Inc. (14.3%), Nestle

SA (12.3%), Ferrero Group (9.1%) and Hershey Co. (7.3%) according to the statistics on

Euromonitor Analysis as of 2015. The Australian chocolate confectionary industry comprises

of the following companies in the top Mondelez International Inc. (39%), Mars Inc. (15%),

Nestle SA (12%), Chocoladefabriken Lindt & Sprungli AG (9.3%) and Ferrero Group (4.6%),

with Haigh Pty Ltd, A E not far behind in no. 8 with 0.9% in 2015. In terms of brand shares,

Haighs Chocolate comes in no. 19 with 0.9% and Cadbury at the top of the list with 30.5%.

The oldest family owned chocolate business in Australia, Haighs Chocolates, is situated

across 14 retail outlets in Adelaide, Melbourne and Sydney with its manufacturing unit in

Adelaide. The unique appeal of Haighs is producing exclusive blends and flavour, combined

with handmade creations from sourcing the best cocoa beans around the globe. They believe

their vision to be a deliverer of a world class chocolate experience.

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Haighs sources most of the beans from UTZ certified farms across the world and works to

ensure improved lifestyles to the cocoa farmers and families through sustainable farming

methods and cultivating better conditions for crop growth, therefore increasing their earnings

and contributing to financial sustainability while protecting the environment and natural

resources. Haighs also reuses rainwater from its factory roof, thereby decreasing the amount

of water needed for production. It is a signatory of the Australian Packaging Covenant and

provides 100% recyclable and biodegradable packaging. It offers the option of returning all

its recyclable products back to it apart from recycling all its bottles, cans, newspapers, etc.

itself. There is no use of plastic even in its outlets and the gift packaging are reusable items.

Additionally, its newspapers are green printed, i.e., carbon neutral.

3.0 Marketing Mix: Haighs Chocolates

Haighs Chocolates specializes in handmade premium quality chocolates combined with the

deliverance of a world class chocolate experience. They dont just offer products; they tap

into services promoting a good purchase experience as well.

Tolonen et al. states that a diverse product portfolio will have a positive effect on a

companys sales volumes, and the product variety is often justified by fulfilling customers

requirements (2015, p. 468). Haighs has a huge line of products ranging from bars, blocks,

confectionery, novelties, gift cards, boxed and loose chocolates with variations in each. They

have also introduced gluten and egg free chocolates for those who need to follow such

lifestyles. Additionally, they also have special products, hampers and corporate branding to

accommodate the needs of many. In terms of levels of product, their core customer value is

consumption; the actual product range from the brand name of the 100-year-old family

business to features such as hand-made and hand-wrapped fresh batch of chocolates of more

than 250 in collection; and the augmented product is the personalized customer care they

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provide with online purchasing and delivery options combined with return policies only add

to their sophistication. Creating a good customer experience through online purchase and

delivery is an integral part of marketing. According to Rose, Hair and Clark (2011, p. 27),

customer experience is defined as the impression that people take-away after interacting

with a businesss products and services and upon this encounter, this perception gets

embedded in the minds of the customers, which could either make or break a business.

Haighs follows the strategy of specialty products due to being high-end goods.

They import high quality beans from South America, Africa and the Pacific and ingredients

such as sugar, milk powder, dried nuts and fruit from Australian producers. The rest of the

procedure of roasting and blending is done locally in their factory in Adelaide. O Brien

(2014, p. 30) argues that improved effectiveness through suppliers may not reduce costs but

with the right kind of suppliers, a significant value can be added that will in turn help to

create and promote brand equity, thus, leading to better perceived brand offerings in the eyes

of the customers and aiding to the growth of a business.

Zucchella and Palamara (2006) say that niche strategies are considered to be competitive

strategies with a unique blend of resources, competencies and capabilities that create a

competitive edge that a business needs to flourish. Haighs is doing just that, targeting a niche

market, especially the tourists and high-end customers during special occasions such as

Easter and Christmas.

In terms of pricing, they follow a cost-plus pricing under cost-based pricing strategy due to

being a premium quality brand offering fine products. Their products range from $2.60 for a

medium gold/bronze foiled dark or milk chocolate heart to $177 for dark connoisseurs

selection. Cost-based pricing is when the price of a product is set by multiplying the cost of

the product by some number greater than one. For example, if the markup on a particular

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product is 15%, the price of the product would be 1.15 times the cost of producing the

product, as mentioned by Pavia (1995, p. 1061). Charging a comparatively low price on

products that require a lot of effort leads to tarnishing the brand image. As stated by Caro and

Martnez-de-Albniz (2012, p. 1358), we consider price and product decisions

simultaneously, and we specifically integrate marketing and operational aspects to

acknowledge that product decisions reside at the interface of both functional areas, and

through product choice, operations can indirectly affect the pricing strategy.

Haighs communicates with customers regarding new products, special offers on occasions,

competitions and other information through the news content on their website. They also

keep their customers updated via social networking websites by constantly engaging them in

their posts with sincerity. Kim and Ko (2012) came to a conclusion in their article that social

media marketing activities lead to value equity, brand equity and relationship equity and these

in turn create purchase intention which results in customer equity. Haighs also promotes

videos of chocolate making, the experience of retail, etc. on their very own Youtube channel.

Paek et al. (2014, p. 548) explains that Youtube is rated as the most visited video-sharing

site and the second most popular website and social media platform and has become a

source for conveying messages and promotions by brands among their customer base. Apart

from these, Haighs also takes chocolate enthusiasts on tours in their factory to give them a

glimpse into their process.

Haighs source their ingredients from around the world and carry out rest of the procedure in

their factory in Adelaide, after which, the final products are sent to their own retail outlets in

Adelaide, Sydney and Melbourne. They dont believe in operating with intermediaries;

instead they want to reach out to the customers and create a meaningful experience for them

by selling their products directly. There is also the option of purchasing products online

whereby they deliver the goods to a designated address within Australia. Li, Xu and Li (2013)

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argue that quality is correlated with return, and even though with high quality products, price

needs to be adjusted accordingly, the number of returns get reduced and hence the cost during

direct online purchasing.

4.0 Competitor Analysis

In any kind of industry, there are multiple players competing to gain a higher market share, to

make more sales, to create customer loyalty, to become sustainable. These players are broken

down further into categories of direct or indirect competition for an individual organization or

business. Direct competitors are the ones who offer the same basic products or services and

indirect competitors are those who offer substitute products or services that could be used

instead. Upson et al. (2012) mentions that Competitor analysis can usually reveal what move

a rival is likely to make, allowing a firm to prepare for the move, particularly focusing on

the marketing mix of the competitors can prove to be beneficiary.

For Haighs Chocolates, 2 competitors have been taken into analysis. Direct competitors

include businesses like Kennedy & Wilson and indirect competitor, Lindt Cafes and Shops.

4.1 Kennedy & Wilson

Product- The product mix of Kennedy & Wilson include boxed chocolates, chocolate bars,

filled chocolates, single chocolates, specialty products, chocolates for cooking and Easter.

There are sub categories under these, for instance, their 100g chocolate bars come in either

milk, dark, orange and mint. They also offer customized corporate gifts and accommodate for

celebratory occasions in the form of cakes, desserts, etc. In terms of levels of product, the

core customer value is consumption; the actual product includes the highest quality of cocoa

around the world sourced to produce premium quality chocolates that are rich in cocoa and

low in sugar content; and the augmented part of the product is, products are shipped

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domestically for those who purchase online. The chocolates sold by KW are classified as

convenience products.

Price- They follow a good value pricing under the customer value-based pricing by

maintaining a balance between quality products and services with fair pricing. Their products

range from $1 for single chocolates to $40 for boxes.

Place- Kennedy & Wilson source high quality cocoa from South America, Asia, Caribbean

and Africa, early vanilla was imported from Madagascar and Fiji but now from Queensland

with berries and other raw ingredients for fillings from Yarra Valley. They aim to make their

chocolates easy to find and have many stockists in the form of stores, cafes, supermarkets,

etc. Their marketing channel involves one intermediary - retailers - following an intensive

distribution. They also participate in sustainable practices by having as small a carbon

footprint as possible and follow ethical means by sourcing beans from slave and child-free

labour.

Promotion- KW maintains public relations in the form of social networking and made a

column in the Life section of The Australian in 2013 under Chocolates blended in heaven

with other articles in its website media archive.

4.2 Lindt Cafes and Shops

Product- The product mix of this indirect competitor is vast, ranging from chocolates to cakes

and coffees, ice creams, hot chocolates, gift boxes, etc. The core customer value is

consumption; the actual product includes the high quality branded chocolates and products;

and the augmented product include the experience of the ambience and other services of the

caf. They take cake and bulk orders as well and their caf products are classified as shopping

products.

Price- Their products are slightly high priced, making them cost based pricing.

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Place- Most of their cocoa is procured from Ghana and their cafes are spread-out within and

outside Australia. They take part in sustainability in many ways through improving lives of

the farmers and others, setting up schools and clean drinking water, etc.

Promotion- Lindt offers promotion in their cafes with their monthly hamper giveaways and

other good deals and participates in several commercials to entice the customers. In terms of

PR, they maintain customer service, operate on social media and send out newsletters.

5.0 Recommendations

Referring to the SWOT analysis in the Appendix, there are some weaknesses that could be

worked upon to turn them into strengths and in terms of opportunities, Haighs could further

exploit these possibilities in their favour.

Since hand-made chocolates take a lot of hard work and effort, charging a high price is

justifiable, however, Haighs should also bring in a different line of products for a different

target market at an affordable price such as, the lower middle class since they constitute a

larger part of the population. This will help them to bring in consistent sales throughout the

year rather than on celebrated occasions or holiday seasons, leading towards a sustainable

business. To support the previous statement, Draganska and Jain (2006, p. 164) quotes, A

common strategy for firms extending their product lines is to differentiate their offerings

vertically, i.e., to provide different quality levels at different prices to capture the differential

willingness to pay for quality among consumers.

Haighs should start to gradually expand outside Australia by taking the first step in

delivering its products to customers in other parts of the world. Setting up their own

distribution centers in populated and core markets will ensure products reach the destinations

without delays and complications. Skrinjar, Drljaca and Kavran (2013) mention that one of

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the best solutions for setting up infrastructural facilities for overseas delivery would be the

airports.

Wharton (2014) emphasizes on the importance of advertising and promotion taking value-

adding forms and serving a diverse range of interests across businesses, organizations, groups

and individuals. Haighs is already a brand in the Australian market and people know about

their legacy, however, investing in value-adding advertisements and TV commercials will

entice the customers further. These adverts need to be differentiated from the mass products.

Similar to the videos on their YouTube channel, they could promote their chocolate making

and put emphasis on their employees for highlights. Furthermore, they could put these

advertisements specifically in hotels since one of their target markets involve tourists.

A loyalty program could be set up at Haighs to reward their frequent customers, by offering

them some discounts on selected items or giving them a gift voucher if they cross a certain

threshold in terms of price. This factor delights the customers, and help to retain them which

adds to Haighs consumer equity. Kim (2015, p. 250) notes customer equity to be a proxy

for the value of the firm and that purchase intention leads to that and hence a sustainable

business.

Since Haighs Chocolates targets the tourists, they should consider the idea of setting up their

retails stores in some of the most crowded airports around the world for global expansion.

Swarbrooke and Horner (2012) support the concept of how airports can bring in extra

business and revenue through retail sales and food and drink sales. In this way, Haighs could

brand themselves in different parts of the world and create demand that will make way for

setting up manufacturing units or retail outlets in those countries further into the future.

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6.0 Conclusion

Due to growing health concerns around the world, including Australia, sales in the chocolate

industry are predicted to go down in the coming years. Moreover, there is likely to be a

shortage in cocoa as well. With keeping these challenges in mind, Haighs Chocolates need to

make profound innovations without compromising their fineness and keep going towards the

future with greater success than they have had in the last 100 years.

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7.0 References

Caro, F, & Martnez-de-Albniz, V 2012, Product and Price Competition with Satiation

Effects, Management Science, vol. 58, no. 7, p. 1357-1373.

DCosta, V 2016, Global Candy & Chocolate Manufacturing, IBISWorld, viewed 26 May

2016, < http://clients1.ibisworld.com.au/reports/gl/industry/default.aspx?entid=359>.

Draganska, M, & Jain, D 2006, Consumer Preferences and Product-Line Pricing Strategies:

An Empirical Analysis, Marketing Science, vol. 25, no. 2, p. 164-174.

Haighs Chocolates, Haighs Chocolates, viewed 26 May 2016,

<http://www.haighschocolates.com.au/>.

International Cocoa Organization 2016, About ICCO, International Cocoa Foundation,

viewed 26 May 2016, < http://www.icco.org/about-us/about-the-icco.html>.

Kim, A, & Ko, E 2012, Do social media marketing activities enhance customer equity? An

empirical study of luxury fashion brand, Journal of Business Research, vol. 65, no. 10, p.

1480-1486.

Kim, J 2015, Sustainability in social brand communities: influences on customer equity,

Journal of Global Scholars of Marketing Science, vol. 25, no. 3, p. 246-258.

Li, Y, Xu, L & Li, D 2013, Examining relationships between the return policy, product

quality, and pricing strategy in online direct selling, International Journal of Production

Economics, vol. 144, no. 2, p. 451-460.

OBrien, J 2014, Supplier Relationship Management: Unlocking the Hidden Value in Your

Supply Base, Kogan Page, Great Britain.

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Paek, HJ, Kim, S, Hove, T & Yoon, J 2014, Reduced Harm or Another Gateway to Smoking

Source, Message, and Information Characteristics of E-Cigarette Videos on Youtube,

Journal of Health Communication, vol. 19, no. 5, p. 545-560.

Passport 2016, Chocolate Confectionery in Australia, Passport, viewed 26 May 2016, <

http://www.portal.euromonitor.com.ez.library.latrobe.edu.au/portal/analysis/related>.

Pavia, TM 1995, 'Profit Maximizing Cost Allocation for Firms Using Cost-Based

Pricing', Management Science, vol. 41, no. 6, p. 1060-1072.

Rose, S, Hair, N, & Clark, M 2011, Online Customer Experience: A Review of the Business-

to-Consumer Online Purchase Context, International Journal of Management Reviews, vol.

13, no. 1, p. 24-39.

Skrinjar, JP, Drljaca, M, & Kavran, Z 2013, Logistics of International Express Shipping and

Air Traffic, Promet- Traffic&Transportation, vol. 25, no. 3, p. 209-215.

Swarbrooke, J & Horner, S 2012, Business Travel and Tourism, Routledge, Abingdon.

Tolonen, A, Shahmarichatghieh, M, Harkonen, J & Haapasalo, H 2015, Product portfolio

management Targets and key performance indicators for product portfolio renewal over life

cycle, International Journal of Production Economics, vol. 170, part B, pp. 468-477.

Upson, JW, Jr, DJK, Connelly, BL, & Ranft, AL (2012), Competitor Analysis and Foothold

Moves, Academy of Management Journal, vol. 55, no. 1, p. 93-110.

Wharton, C 2014, Advertising: Critical Approaches, Routledge, Abingdon, Oxon.

World Cocoa Foundation 2016, Our Approach, World Cocoa Foundation, viewed 26 May

2016, < http://www.worldcocoafoundation.org/our-work/our-approach/>.

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Zucchella, A & Palamara, G 2006, Niche Strategy and Export Performance, in (ed.),

International Marketing Research (Advances in International Marketing), Emerald Group

Publishing Limited, p. 63-87.

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8.0 Appendix

8.1 SWOT Analysis

Strengths

Hand-crafted fine chocolates Hand-crafted chocolates by Haighs are specially made

to add value to the end product for the customers, differentiating them among the

other competitors in the market.


A large collection of products Haighs has over 250 varieties of chocolates to choose

from, giving customers the luxury to mix and match different kinds of samples to

purchase, including gluten and egg free products, etc.


Factory tours Haighs wants its customers to get a glimpse of their chocolate

making, hence providing tours around the factory in Adelaide and giving free samples

afterwards makes it more attractive for the customers, as they get inclined to buy

further.
Promotions on celebrated days Haighs Chocolates communicates diligently about

all its special promotions on Mothers Day, Easter, Christmas, etc. to the customers,

giving them the incentive to make a purchase.


Sustainable practices Haighs follows several sustainable practices as mentioned

previously in this report, which brands them in the community for taking

responsibility and adding to their strength amongst the customers.


Brand name The brand name of Haighs Chocolates is renowned across Australia

and even on a global platform after achieving the international proclamation, which

draws in customers to have a taste.


Social media interaction Haighs shows sincerity while interacting with the

customers and fans on its social media pages, letting them know about the recent

updates and news, thereby making them feel engaged and involved with the Haighs

community and creating genuine trust.

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Operating without intermediaries Haighs Chocolates believes in selling directly to

their customers through their retail stores and online since this approach adds a certain

meaning to them as well as the customers besides retaining margins at each level of

the production.

Weaknesses

Premium price Haighs charges high prices on its products, since its target markets

are tourists and upper middle class. However, this becomes a weakness since these

markets do not have a lot of opportunities for penetration and customers are not able

to purchase Haighs products frequently.


Delivery not operated internationally Haighs Chocolates have kept the option for

online purchase and delivery to its customers residing in Australia only. However, if a

customer wants to send a box of Haighs Chocolates to a loved one in another country

or purchase one for himself/herself, there is no scope for that.


Few advertisements Haighs taps little into its chocolate making through its videos

and these are only available on their Youtube channel.

Opportunities

Loyalty programs The trend nowadays with most retail stores is to give back to their

loyal customers through loyalty programs. Haighs could follow a similar path and

win the hearts of potential customers.


Set up stores in airports Since Haighs wants to tend to their customers directly, they

could set up stores at airports in other parts of the world, after doing a market analysis

in that region.

Threats

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Other popular brands in the market There are several other well-known brands such

as Cadbury, Lindt, Ferrero, etc. operating side by side in the market under a lower

price compared to Haighs.


Society is turning health conscious Gradually, the society is becoming health

conscious and cutting back on sugar and high calorie food.


Rising cost of raw materials The price of sugar and other additional raw ingredients

are on the rise, making the chocolate production turn expensive day by day.

8.2 Positioning Chart

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For the positioning chart, 4 competitors of Haighs Chocolates have been considered for the

analysis- Cadbury, Lindt, Zokoko, Bahen & Co., and Kennedy & Wilson.

The two attributes have been taken into account- Variety because it is an important aspect

when it comes to purchase as customers preference vary and they are constantly looking for

newer flavours, textures, etc. to add to their list; and Price because most customers opt for

products that they are able to afford without much consideration and thought, making it a one

of the most crucial attributes.

High Price

Haighs
Chocolates

Zokok
o
Lindt Caf and
Bahen
Shops
& Co.

Low Variety More Variety

Kennedy &
Wilson

Cadbur
y

Low Price

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