Cowgirl Chocolates - Marketing Analysis Case

Problem Statement

Before spending an additional $3,000 on an advertising campaign Marilyn Lysohir needs to strategically consider how to reach her goal of becoming a profitable company by analyzing consumer perceptions, pricing strategies, identifying and gaining access to effective distribution channels and efficient use of its Web site.

Situation Analysis

Since the inception of a revolutionary spicy chocolate recipe, Marilyn Lysohir and Ross Coates have been striving to grow a profitable business in the chocolate industry. Each year Marilyn has loaned the company money to keep it running. Cowgirl Chocolates, primarily run by Marilyn, with help from family and art associates is branded based on the concept that chocolate lovers are fun and adventuress in spirit and whimsical. Cowgirl chocolates caters to both Chocolate lovers and spicy food fans.

Cowgirl chocolates are manufactured by Seattle Chocolates a private label company well know for working with a Frango chocolatier to create their chocolates. After the final product is created incorporating a receipt of Cowgirl spices, Marilyn creatively packages the final product into custom tins, bags, buckets and boxes.

Despite having award winning packaging designs and a high quality chocolate, many consumers and retailers are reluctant to purchase or retail the product. Both consumers and potential retailers have mentioned that the chocolates are too spicy. To help gain greater access which has yet materialized Marilyn created a non-spicy chocolate and calls it mild-mannered.

Analyzing industry statistic helps to explain some this reservation. According to Fiery Food Trends, 1999, “only 10-15 percent of American consumers are currently eating hot foods”. In addition, these statistics indicate that the average consumer of fiery foods is male, between 35 and 55 years of age. These people are generally of the high-energy, risk-taking personality type, and tend to earn at least $60,000 per year. The Fiery Food Trends further indicates that consumers have expanding palates for various types of spicy foods of the Asian and Mexican cultures.

These trends indicates that although the current target market is high-energy and risk-taking this target will not necessarily identify with a cowgirl country whimsical theme or be completely satisfied with just the effects and tastes of cayenne pepper spices.

Competitor analysis as detailed on appendix B indicates that a more sophisticated expanding palate for Asian Mexican spices is gaining momentum. All of the competitors with the exception one which sells only a spicy hot chocolate mix are horizontally expanding their established truffle lines to include various culture spices and promoting them with more cultural oriented themes such as around the world exotic spices.

Another area that requires analysis is the pricing structure. Although none of Cowgirl Chocolates competitors carry a full-line of exclusively hot cayenne spiced chocolates to benchmark from, Marilyn indicated that she prices her line of bars similar to Seattle Chocolates bars. She further expressed concern over the fact that the tins stood out in price at specialty spicy food shops.

Analysis of the pricing structure on appendix A provides some explanation. When comparing each product with the percentage of total revenue gained it becomes evident that revenue declines as wholesale and retail prices increase. For example, the best selling product which represents 50% of sales and is equally priced with Seattle Chocolates is marked-up the leased at 29% wholesale and 158% retail and has the greatest sales. With the exception of the caramel sauce, all other chocolate revenues decrease as the mark-up increases.

Another area of concern that requires analysis is the ability to identify and gain access to effective distribution channels. Much of this problem stems from first not identifying and targeting a specific market. During my interview with Marilyn I asked her if she targets a particular type of customer or establishment and she indicated she did not. The study case further reveals that Marilyn takes a trial an error approach to promote her products. This approach is very time consuming and not an effective strategy for distributing perishable products or limited time and energy.

Another avenue for distribution is the Cowgirl Chocolate web site. The site currently accounts for one third of all sales but currently has no tracking mechanisms. Without the ability to track sales or visitors Marilyn is not able to study the buying process. According to Market-Vantage – Internet Performance Marketing, “the ability to capture information about web visitors allows you to study