SCENARIO
HotChox is the name given by Janeetta Wolmarans to her innovative chocolate confectionery, which combines ‘dark’ chocolate and fresh chilli in a small foil-wrapped bar. She runs a small processing plant, Wolmarans Sweets CC, in Westlake Business Park, Cape Town, specialising in this and a small range of other similarly unusual confectionery.
Her domestic market has grown fairly well, and she is supplying her products to specialist confectionery outlets at a few major shopping malls in Cape Town, Johannesburg, Pretoria and Durban. Feedback from her retailers indicates that HotChox is highly popular with high- income earners (LSM 8-10*) in the 25 to 40 year agegroup.
Technically, the product combines several healthy lifestyle elements: the dark chocolate has now been accepted as a good anti-oxidant, as well as having other health-promoting properties; chilli also carries health benefits; furthermore, the chocolate and chilli are both organic products and therefore environmentally friendly. Although Janeetta’s plant is modern and fully compliant with necessarily food health standards, much of the processing, especially the finishing, wrapping and packaging, is labour-intensive. This makes the product expensive, compared with high-quality chocolate products imported from Europe. She feels, therefore, that the prospects for further growth in the South African market are limited and that she should start to develop foreign markets.
ASSIGNMENT
Your assignment is to recommend to Janeetta a suitable approach for her export development:
1. You should explain to her how she should tackle market selection, with emphasis on market segmentation and what this will mean to her and why it is important for small companies.
2. You should explore the different criteria she could consider for segmentation–not merely LSM levels. You should explain what research might be required to determine criteria for foreign markets.
3. You should also explain the type of specific information she will need to obtain about her target market and the impact that information might have on her product and/or its packaging.
4. Select one or two foreign markets for Janeetta to approach initially, so that you can recommend suitable market entry and distribution channels.
5. Finally, you should recommend how she might promote her product in her chosen market.
Your recommendations must be practical and relevant to Janeetta’s business and product. This is a small company and, although successful, does not have large funds at its disposal. You will need to do some research in order to make practical recommendations. Note the mark allocation as a guide to the amount of detail required.
* LSM refers to Living Standards Measures, which, while based on income levels, actually measure what income earners spend their money on and therefore what their lifestyle choices are likely to be. This is regarded as a more meaningful categorisation of consumers for marketing purposes than actual income levels