We will look at the first two amendments. Rocky Mountain Chocolate Factory Inc. is a confectionary and international franchisor with branches all over the world. The factory is in the business of manufacturing chocolates, candies and confectionary products. The company has more than 380 stores spread all over Canada, the USA, and United Arab Emirates in which most of the branches are franchised. The company is able to easily open more branches through the franchised stores with no or little capital injection. The businesses are usually strategically located in places where many people do pass especially targeting tourists’ places. In this research paper, we are going to examine the marketing mix of this Rocky Mountain Chocolate Factory, its marketing segment and benefits to the North American consumer. We will also make a SWOT analysis for the company, its core competencies and its competitive advantages in North America. We will also look at the franchised stores in other countries and analyze reasons for expansions to the new countries and its competitive advantages in the new countries and their strategic importance to the physical environment.
About Rocky Mountain Chocolate Factory
The Rocky Mountain Chocolate Factory was founded in 1981 by Frank Crail and within a year the company opened the first franchise in Colorado Springs and Utah at Park city. The RMCF being an international franchisor has its operations in the US, Canada and the United Arab Emirates. Through its refrigerated trucks, the company manufactures a wide range of premium chocolate candies which are later supplied to the franchised locations. These products include; fudge, candy apples, chocolates and confections which are made in full view of the customer while using their traditional cooking wares. By 2004, in Canada alone the company had 29 franchises. In March 2006, out of the 310 branches the company owned, 301 branches were franchised and only 9 branches were fully owned by the company. Due to its expertise in manufacturing, the company uses this reputation to enhance the sale of its products through new distribution channels like; internet, fundraising, corporate sales, wholesaling and mail orders. In the year 1992, the company opened its first franchised store in Canada by entering into an agreement with Immaculate Confections Ltd. of Vancouver, British Columbia. Immaculate Confections purchased the rights to franchise and oversee all Rocky Mountain Chocolate Factory stores in Canada and by March 2006, the company had 33 branches in Canada.
In this case we will examine the pricing, product, place and promotions of Rocky Mountain Chocolate Factory, in fact simply known as the 4Ps. RMCF being a franchised business, it does not have a uniform price for all its products although they have a price guideline that does assist the stores in setting the recommended price. The RMCF do follow a premium pricing plan which is not competitive on the price. This is because the company insists on the quality of the product than the price and it does target the middle and upper class market who do not have a major problem with the price of the product rather the quality of the product (Early J.). Although franchisees do set their own prices, the company recommends the prices averagely at $18.30 per pound. This price is above its competitors’ like Russell Stover and See’s candies but below those from Godiva chocolates. The higher price implies that they are of a fine quality while being not the most expensive means that they are appropriately priced for the target market (Gardner K., Manez J., Richardson J. & Russo E. Rocky Mountain Chocolate Factory).
Also in the marketing mix we have the premium high quality products produced by the company. The company produces premium chocolate candy which is the core of its competitive advantage. By offering high quality delicious premium products to its customers at a fair price, the company competes favorably with its competitors. The company has also the advantage of manufacturing most of its products in the stores as customers’ watch; the customers have fun watching them prepared and in turn increase the premium nature of the stores.
Another marketing mix of RMCF is that of location. The location of the company stores are done after a thorough and proper placement by the company staff. This reduces the marketing costs by having the storefront serve as a way to market its activities
Lastly but not least is the issue of promotion. The company has the habit of cooking their chocolate on site as customers watch them being prepared. The aroma on site as cooking continues is one of the promotional strategies of the company. It has been observed that the stores that have this onsite cooking attract many customers walking by the store. Apart from this strategy, the company sometimes engages in promotional activities but do not tell customers that their chocolate is the economical way to go mainly because of the pricing and the target market. They also indulge in word of mouth advertising. This has been effective because of its brand and usually they draw a large crowd by recommendation (Early J.).
The company started its operations in the year 1981 and by year 1982 it had started to franchise. Since then it has used franchising opportunities to expand its foothold while perfecting its art in manufacturing high quality chocolate and confectionaries. The company uses the following business strategies to remain afloat and as a market leader; product quality and variety. To increase customer satisfaction, the company does manufacture high quality and unsurpassed taste for its chocolate candies by use of the wholesome ingredients in its factory with its own recipes developed by its master candy maker. The different stores do provide customers with a variety of fudge, gourmet caramel apples and as many as 200 of the company’s chocolate candies.
Another marketing strategy used is the company’s store atmosphere and ambience. By establishing in each Rock Mountain Chocolate Factory an enjoyable and inviting atmosphere, the company wants to attract customers to its factory site and coupled with the numerous product ranges it does manufacture in its stores in full view of the customers, the company intends the exercise to be fun and entertaining to the customers while relaying a message of freshness and homemade quality and about 40% of the products sold are prepared on the factory premises (Hot stocked.com).
Another market strategy is that of site selection. Suitable sites are usually considered by the company before setting a factory or a franchise and this has been one of the critical successes of the Ricky Mountain Factory. A suitable site includes one where there’s enough visibility of the premises, accessibility of the premises, a variety of tenant mix, attractive places and a high level of foot traffic. The company’s competitive strength has been in selecting and evaluating a potential site for their business.
In Canada, the company has franchised stores in the major towns and cities. It has stores in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland (Rocky Mountain Chocolate Factory Canada locations). Here there are more than 50 Rocky Mountain Chocolate stores. Each store can buy products from the corporate or again invent theirs. Here customers enjoy watching as fudge is made, staff mixing ingredients, hearing the rocky pop sound as they sniff a heady sequence of candy. Each of the stores are designed in a way to reflect its environment but retains the company look (50-Store Candy Franchise Sweetens Sales, Whips Up Reports, and Clarifies Visibility).
The company’s SWOT analysis can be analyzed by looking at its internal strength first. RMCF is a growth oriented company. With its presence in the US, Canada and the United Arab Emirates and having over 300 branches in those countries and being open to franchising its stores, the company is bound to grow its customers as well as its sales. In 2006, the company had 301 franchised stores in their system and it was rated the number one franchise opportunity in the candy category by the Entrepreneur Magazine in the same year.
Its Hand-Made quality products are also its internal strength. The company’s in-store preparation of candy is meant to be entertaining to the customers as well as being fun. Here a strong message of freshness though is being conveyed and this will keep customers coming back for the fresh taste thus increasing the revenues at the end of the day.
Another internal strength is branding with recognizable trademarks. The staff at RMCF does easily develop replicable designs and specifications that are used throughout the franchised system. Example is in the year 200 when the company retained a nationally recognizable design firm to critically evaluate and updates its existing design which was meant to; increase efficiency in operations by reducing store layouts and also to increase average revenue per unit and thus opening it to new markets. The trade name ‘Rocky Mountain Chocolate Factory’ and other trademarks, symbols, slogans, emblems and logos & designs are of material importance to the business. The registration of the trademark in Canada has been granted
The company’s external opportunities include its presence in the international arena. Having a presence in of 310 branches in 3 continents gives it a wide appeal to a bigger population. This is coupled with the growth of tourism industry which has been identified as big consumers of the RMCF products which are also available in retail kiosks thus near to customers.
Although the company has been doing well, it has a host of some problems and weaknesses which need to be improved on. These include; due to its expansion strategies, the company may outgrow its production facilities from its headquarter at Durango. In the year 2000, the company opened its first kiosk and by the year 2006 there were 22 kiosks in operations. Through the kiosk growth, there is loss of personal touch as hence as more kiosks are being opened, there’s the risk of losing more customers.
The external threats include competition from some other companies with low priced items like from Hershey, also competition for its personnel and qualified franchisees. This competition may adversely affect the company in terms of profits and expansion strategies. There’s also the problem of international cocoa suppliers, the supply of this raw material has been rocked with fluctuating market prices due to monetary fluctuations, economic and political conditions from cocoa producing countries. This is further affected by the effects of global warming which include the conditions affecting shipping temperatures.
Competencies of RMCF in North America
Rocky Mountain Chocolate Factory have learned from experience that most vacationers tend to leave their diets at home and so they have capitalized on this to strategically place its stores in tourist areas, regional malls and factory outlet malls. The visibility of the stores and the issue of strategizing on high foot traffic have given the company strong name recognition and as a result a demand for its franchises. This they blend with manufacturing a wide range of premium chocolates for customers to choose from with unique ways of packaging them (Consumer Goods Technology 2006).
The company also buys its ingredients from limited reliable suppliers to ensure consistent supply of its products and due to fluctuation of prices, the company buys earlier its supplies and thus ensure a stable price for their consumers hence retaining them.
The staff of franchised stores is subject to a one week comprehensive training program. This is to ensure that the franchised stores give excellent service like the original stores in different topics which include customer service, pricing, cooking, inventory, high quality standards, merchandising and in record keeping.
RMCF competitive advantages in North America
Compared to the big players in the industry, RMCF is small in terms of market capitalization and has to use the best strategies in order to be the top chocolate retailer in North America. Some of these companies have greater brand recognition than RMCF, financial and marketing strength. Although competition does adversely affect the company and the operational results, it has also its strengths that it has used to effectively compete for a share of the market. These are analyzed in the next paragraphs (Hot stocked.com).
RMCF has the advantage of producing high quality and superior products that beat their competitors both in quality and taste. They also do their supplies purchases earlier and this ensures a continued supply of the products and they have discovered new ways to distribute their products like through the internet.
RMFC also has the advantage of strategically locating its stores. Most of these stores are located where many business conferences and meetings do take place and thus they can be accessed by a large number of tourists that is within a walking distance to the premises of RMCF. The targeted market is usually the middle and upper class who do not usually mind about the price and are willing to spend money on fine chocolate. This in turn increases revenue and drives growth of the particular location. Although there competition in such places, it is watered down by the fact that at RMCF does have quality chocolates, the pricing is fair (it’s higher than that of that of Hershey but lower than Godiva).
Operations in other countries
The company has operations in more than 300 stores all over the world with physical presence in the US, Canada and the United Arab Emirates. This has led to quick growth of RMCF and by the year 2006, out of the 310 branches, 301 were franchise stores.
In the new countries, each franchise owner is responsible for his/her own business. But to conform to uniformity throughout the branches, they are subjected to a complete one week comprehensive training program at its headquarters located in Durango. During the one week period, they are thought about the company’s philosophy of store operations & management, cooking, customer services, pricing, quality standards, personnel management and merchandising. The training is based on a standard operating policies and procedures that are contained in an operations manual. This manual is availed to all franchisee and meant to be followed by all the outlets as it contains the terms of franchise agreement. Before they are left on their own, the trainees are placed in some stores and are expected to work in those key areas and follow orientations on how the company operates and by meeting senior members of the management of the company. They are also versed with the company’s knowledge and that they are fully versed with the company’s proven techniques which are the pillars of its success.
In addition to the above training, the company does give support to the franchised stores through field consultants who review with the franchise stores and provide necessary advice and guidance. In this way they ensure improved franchised profitability which is to be replicated all over the new franchised branches (Hot stocked.com).
Site of a new franchised store
As is with the tradition at Rocky Mountain Chocolate Factory, the location of its stores is very important as this critically determines the amount of sales generated as well as the target customers. The stores in the new locations are strategically located in 5 primary environments; regional malls, factory outlet malls, tourist areas, entertainment centers and street fonts and in each of these attractive places there is high levels of foot traffic. Before a new site is approved, the company management checks out the potential site and then they look at the applicant franchisee’s net worthy and liquidity, work ethic and compatibility with the company’s operating philosophy (Hot stocked.com).
In our case we will look at Rocky Mountain Chocolate Factory Canada. Canada is a vast country covering over 41% of northern America. The company started its operations in Canada in the year 1992 by entering into an agreement with Immaculate Confections Ltd. of Vancouver, British Columbia. They were granted the rights to franchise and run all RMCF operations in Canada. By March 2006, the company had a total of 33 franchised stores in Canada. The company continues to grow its branches in Canada especially due to strategically locating their stores in high foot traffic areas, tourist attraction sites, malls and nears cinema centers. They also have the right target customers as most of Canadians and the tourists who visit the country belong to the middle or upper class from mainly America and Europe.
Reasons for expansion to the new country
Before any expansion plans are effected, Rocky Mountain Chocolate Factory has to plan carefully and study the new franchisee company and then implementations done in slow controlled stages to ensure that the new store has the same décor and feeling like the other stores. When expanding, they look among other issues on the following; expanding in the existing market and diversifying of products, the available market and the availability of a suitable site (Business expansion).
The following were some of the reasons for expansions to the new country; availability of ideal locations for RMCF. The company always looks to franchise with a company that is located in a tourist area with heavy foot traffic and Canada being a tourist destination is an ideal place for RMCF businesses. Canada is an economic giant in North America that parallels the US and covers a vast land with a large population of about 32 million people (2005 estimate). Located in Northern America, it borders North Atlantic Ocean to the east, North Pacific to the west and Arctic to the North while USA is on the south. The country is slightly larger than the US with a coastline of 202,080 km whose terrain is mostly plains with some mountains in the west and lowlands in southeast. The climate of Canada varies from temperate in the South to arctic in the North (About.com).
The environment plays a big role in the uptake of RMCF products. With a population of over 32 million people who are mostly middle class, RMCF has it right with their target customers. The temperate climate also contributes, as tourists traverse to see for them the attractions in Canada like the Logan Mountain (5,959m) and other historic sites they have every reason to taste this quality made chocolate and candies. Canada being a developed country is now using technology to advertise and sell its products, they are also on the social site, facebook, by the name Rocky Mountain Chocolate Factory (Canada) where they efectively communicate with their customers.
The expansion is in order because the RMCF wants to be the market leader in providing of high quality chocolate not only in America but the world over and Canada couldn’t be a beter place to try expansion. It has worked and so the company has grown the number of stores to 33 in 15 years from 1992 to 2006. The key competencies of the RMCF are crucial to helping the stores in the new country. Canada is known to be a high tech industrial society which exports industrial goods to several countries. The company uses its staff to train the new staff of franchised store extensively for 7 days. This ensures that they have the required expertise to make quality chocolate to their customers. The new staff is required to work in vital departments during training to get accustomed on the critical operations of the company. The company also does supply some ingredients to the franchised store to ensure a steady and stable supply of the products to the market.
Having started in the year 1981, the company Rocky Mountain Chocolate Factory is in the business of confectionary manufacture and is an acclaimed international franchiser having opened its first franchised business the following year, 1982, after starting its operations. The company had a total of 310 branches by March 2006. It has its factory stores in the US, Canada, Guam and the United Arab Emirates. The company has a policy of preparing its products in the stores as customers watch as it creates an aroma and a special ambiance that attracts foot traffic customers to its stores for fresh products- this has been its strong selling point.
The company’s market mix includes the four Ps that is; the price, product, promotion and place. The company believes that its competitive strength lies in the brand ‘Rocky Mountain Chocolate Factory’ – hence reason for rapidly and successfully franchising, its reputation to make high quality chocolates and confectionaries, the ability to make their products as customers watch which makes them want the fresh taste, its experience and unique way of identifying and selecting stores for its new franchisee, its expertise in manufacturing of top quality chocolate and candy products. This is coupled with its structure to train newly franchised store managers and other senior staff to ensure that the new branches conform to the other established stores’ standards.
The company’s strengths lie in its; national brand recognition, its handmade quality products, its ability to brand with recognizable trademarks and its aggressiveness for growth. The external opportunities include; that it wants to grow in the tourism industry and attracting the international arena while offering warm & fuzzy products in commercial retail outlets. Although successful, the company faces internal weaknesses that are; outgrowing production facilities in it’s headquartering at Durango while outgrowing its niche market. There’s also the danger of losing a personal touch through its kiosk growth. The low prices from its competitors coupled with unstable international cocoa prices are some of its external threats.
The company has plans to continue franchising and be the world’s biggest chocolate manufacturer. This it has embraced by starting to sell its products through wholesaling, the internet, corporate sales and mail orders. They plan to use this and their Victorian décor which enhances the friendly atmosphere while continue manufacturing a variety of high quality candy products.