Harvard Case - Creative Chocolates in Nigeria: To Test Market or Not?
"Creative Chocolates in Nigeria: To Test Market or Not?" Harvard business case study is written by Vijaya Sunder M. It deals with the challenges in the field of Marketing. The case study is 4 page(s) long and it was first published on : Mar 21, 2022
At Fern Fort University, we recommend that Creative Chocolates proceed with a limited test market launch in a select region of Nigeria. This approach will allow the company to gather valuable data on consumer preferences, pricing strategies, and distribution channels before committing to a full-scale national launch. This recommendation is based on a comprehensive analysis of the Nigerian market, Creative Chocolates' strengths and weaknesses, and the potential risks and rewards associated with different market entry strategies.
2. Background
Creative Chocolates is a start-up company in Nigeria that produces high-quality, artisanal chocolates. The company's founder, Ngozi Okoro, has a passion for chocolate and a vision to create a premium chocolate brand that caters to the growing middle class in Nigeria. Okoro is considering two options for launching her product: a full-scale national launch or a limited test market launch. The case study explores the pros and cons of each option, considering factors such as market size, competition, and the company's resources.The main protagonists of the case study are Ngozi Okoro, the founder of Creative Chocolates, and her team of advisors. Okoro is a passionate entrepreneur with a strong understanding of the chocolate market, but she is also aware of the risks associated with launching a new product in a competitive market. Her advisors provide her with valuable insights and guidance on the best course of action.
3. Analysis of the Case Study
To analyze the case study, we will use a combination of frameworks including:
- SWOT Analysis: This framework helps us understand the company's internal strengths and weaknesses, as well as the external opportunities and threats it faces.
- PESTEL Analysis: This framework helps us analyze the political, economic, social, technological, environmental, and legal factors that could affect Creative Chocolates' success.
- Marketing Mix (4Ps): This framework helps us analyze the key elements of Creative Chocolates' marketing strategy, including product, price, place, and promotion.
- Consumer Behavior Analysis: This helps us understand the needs, wants, and preferences of the target market for Creative Chocolates.
- Competitive Analysis: This helps us understand the competitive landscape in the Nigerian chocolate market and identify key competitors.
Strengths:
- High-quality product: Creative Chocolates offers premium, artisanal chocolate with a unique flavor profile.
- Passionate founder: Ngozi Okoro has a strong passion for chocolate and a deep understanding of the market.
- Growing middle class: The Nigerian middle class is expanding, presenting a potential opportunity for premium chocolate products.
- Limited competition: The market for premium chocolate in Nigeria is relatively underdeveloped.
Weaknesses:
- Limited resources: Creative Chocolates is a start-up company with limited financial and human resources.
- Lack of brand awareness: The company is new to the market and needs to build brand awareness.
- Limited distribution network: The company needs to establish a reliable distribution network to reach its target market.
Opportunities:
- Growing demand for premium products: Consumers in Nigeria are increasingly seeking out high-quality products.
- E-commerce growth: The rise of e-commerce provides new opportunities for product distribution.
- Government support for small businesses: The Nigerian government offers support programs for start-ups.
Threats:
- Competition from established brands: International chocolate brands are already well-established in Nigeria.
- Economic instability: Nigeria's economy is subject to fluctuations, which could impact consumer spending.
- Political instability: Political unrest could disrupt business operations.
PESTEL Analysis:
- Political: The Nigerian government has implemented policies to support small businesses, but political instability can pose a threat to business operations.
- Economic: The Nigerian economy is growing, but it is also subject to fluctuations. The growth of the middle class presents an opportunity for premium products.
- Social: Nigerian consumers are increasingly interested in premium products, but they are also price-sensitive.
- Technological: The rise of e-commerce and social media provides new opportunities for marketing and distribution.
- Environmental: The company should consider sustainable practices in its manufacturing processes.
- Legal: The company needs to comply with all relevant regulations, including food safety standards.
Marketing Mix (4Ps):
- Product: Creative Chocolates offers premium, artisanal chocolate with a unique flavor profile. The company can differentiate its products by offering a variety of flavors and packaging options.
- Price: The company needs to find the right price point that balances profitability with consumer demand. A premium pricing strategy is appropriate for the target market.
- Place: The company can distribute its products through a variety of channels, including retail stores, online platforms, and direct sales.
- Promotion: The company can use a variety of marketing channels to reach its target market, including social media, digital advertising, public relations, and events.
Consumer Behavior Analysis:
- Target market: Creative Chocolates' target market is the growing middle class in Nigeria, particularly those who appreciate premium chocolate and are willing to pay a premium price.
- Consumer needs and wants: Consumers in this segment are looking for high-quality, artisanal chocolate with unique flavors and packaging. They also value convenience and accessibility.
- Consumer behavior: Consumers in this segment are likely to be influenced by social media, online reviews, and word-of-mouth marketing.
Competitive Analysis:
- Direct competitors: Creative Chocolates faces competition from both international and local chocolate brands. International brands such as Cadbury, Nestle, and Hershey have a strong presence in Nigeria. Local brands such as Chocolate Royal and Royal Chocolate are also gaining popularity.
- Indirect competitors: Creative Chocolates also faces competition from other confectionery products, such as cakes, cookies, and candies.
- Competitive advantage: Creative Chocolates can differentiate itself from its competitors by offering a premium, artisanal product with a unique flavor profile. The company can also focus on building a strong brand identity and providing excellent customer service.
4. Recommendations
Based on the analysis above, we recommend that Creative Chocolates proceed with a limited test market launch in a select region of Nigeria. This approach will allow the company to gather valuable data on consumer preferences, pricing strategies, and distribution channels before committing to a full-scale national launch.
Specific Recommendations:
- Select a target region: Choose a region with a high concentration of the target market and a strong infrastructure for product distribution.
- Develop a limited product line: Focus on a few key products that appeal to the target market.
- Set a premium price point: Price the products at a premium to reflect their quality and uniqueness.
- Establish a distribution network: Partner with local retailers and distributors to reach the target market.
- Develop a marketing plan: Use a mix of marketing channels to reach the target market, including social media, digital advertising, public relations, and events.
- Monitor and evaluate results: Track key metrics such as sales, customer satisfaction, and brand awareness. Use this data to refine the marketing strategy and product offerings.
5. Basis of Recommendations
The basis for our recommendation considers the following factors:
- Core competencies and consistency with mission: The test market launch aligns with Creative Chocolates' mission to create a premium chocolate brand in Nigeria. It allows the company to test its product and marketing strategy in a controlled environment before expanding to a wider market.
- External customers and internal clients: The recommendation is based on an understanding of the target market's needs and preferences, as well as the company's internal resources and capabilities.
- Competitors: The test market launch allows Creative Chocolates to gather valuable data on its competitors and adjust its strategy accordingly.
- Attractiveness ' quantitative measures if applicable (e.g., NPV, ROI, break-even, payback): While quantitative measures are not provided in the case study, the test market launch allows the company to assess the financial viability of its business model before committing to a full-scale national launch.
- All assumptions explicitly stated (e.g., needs, technology trends): The recommendation is based on the assumption that the Nigerian market is receptive to premium chocolate products and that the company can establish a successful distribution network.
6. Conclusion
The test market launch is a strategic approach that allows Creative Chocolates to mitigate the risks associated with a full-scale national launch. It provides the company with valuable data and insights that can inform its future growth strategy. By carefully planning and executing the test market launch, Creative Chocolates can position itself for success in the competitive Nigerian chocolate market.
7. Discussion
Other Alternatives:
- Full-scale national launch: This option would allow Creative Chocolates to reach a wider market quickly, but it would also carry a higher risk of failure.
- Online-only launch: This option would allow the company to reach a wider audience and reduce distribution costs, but it would also limit the company's ability to build brand awareness and customer relationships.
Risks and Key Assumptions:
- Risk of failure: There is a risk that the test market launch may not be successful, which could lead to financial losses.
- Competition: The company may face strong competition from established brands in the target region.
- Consumer acceptance: There is a risk that consumers may not be receptive to the company's product or pricing strategy.
Assumptions:
- Market demand: The company assumes that there is sufficient market demand for premium chocolate products in the target region.
- Distribution network: The company assumes that it can establish a reliable distribution network to reach the target market.
- Marketing effectiveness: The company assumes that its marketing efforts will be effective in reaching the target market and building brand awareness.
8. Next Steps
- Develop a detailed test market plan: This plan should include specific objectives, target market, product line, pricing strategy, distribution channels, marketing plan, and budget.
- Select a test market region: Choose a region that is representative of the target market and has a strong infrastructure for product distribution.
- Develop a marketing campaign: Create a marketing campaign that targets the specific needs and preferences of the target market.
- Monitor and evaluate results: Track key metrics such as sales, customer satisfaction, and brand awareness. Use this data to refine the marketing strategy and product offerings.
- Make a decision: Based on the results of the test market launch, Creative Chocolates can then decide whether to proceed with a full-scale national launch.
This comprehensive plan will help Creative Chocolates to achieve its goal of launching a successful premium chocolate brand in Nigeria.
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Case Description
The case is set in 2022 when Creative Chocolates, a popular United States based chocolate manufacturer, plans to enter the African market. Known in the United States for its unique "warm freshbaked" chocolates, Creative Chocolates expanded to over 100 countries with 26,000 outlets worldwide since its inception in the late 1980s. However, all their outlets were either their own stores or franchisees. Attracted by the market research data on the population growth and economic success of Nigeria and other African countries, Alan Rickman, the new chief executive officer of Creative Chocolates, plans a growth strategy based on penetrating the African market. The case presents Rickman's dilemma-whether to conduct test marketing or not-and builds on it to discuss his next step.
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