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Charles Chocolates Case Solution

Solution Id Length Case Author Case Publisher
2736 1652 Words (6 Pages) Charlene Zietsma Ivey Publishing : 9B13M094
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Charles Chocolates is a premium chocolate producer based in Portland, Maine, which has recently welcomed its new president, Steve Parkland, the focus of whom is to increase the size of the company to double or triple what already exists. The industry it operates in has a small number of players who offer slightly differentiated products. As such, there are many barriers to entry which makes the industry unattractive for new entrants. Amongst the numbered players within the market, there are Godiva, Lindt, and Delice. Charles Chocolates has a history of providing top-quality products, having received an endorsement award from a credible institute. The company operates four major business lines; retailing through company-owned stores– which contributes the highest to their sales by 50%, wholesaling, online/phone sales, and sales from Sandwich Heaven. While the products of the company are fairly expensive, it currently possesses a customer base less than what it has the potential. Therefore it is recommended for the company invest in higher brand awareness. Currently, the financial position of the company is very strong with capable leadership, which could be a reason why the company should go for the many growth opportunities available to them.

Following questions are answered in this case study solution:

  1. Analyze the structure of the premium chocolate industry. Is it attractive?

  2. What are the key success factors – what does it take to succeed in this industry?

  3. What are the most important resources, capabilities and core competencies of Charles Chocolates?

  4. What are the options for growth available to Charles Chocolates? What do you recommend?

  5. If you were Steve Parkland, what would you do?

Case Study Questions Answers

1. Analyze the structure of the premium chocolate industry. Is it attractive?

The Premium chocolate industry faces high barriers to entry which makes it difficult for new entrants to capture market share. There are multiple reasons which make this claim true; firstly, a large portion of the consumers are "heavy users," which refers to the segment of the market that possesses good information about the offerings within the market; heavy users also are mostly loyal to certain brands, having developed emotionally built perceptions, such as Charles Chocolates, which implies that most brands already existing in the Premium Chocolate industry have firmly consolidated market shares which will be difficult for the new entrants in the market to challenge. Moreover, another challenge that new entrants would have to face would be the high capital requirements; the new entrants require high financial investments to begin with to ensure the quality of the premium chocolate. The high-quality inputs are only to be imported, which implies higher costs. It is also imperative to possess a strong resource cushioning and a thoroughly planned out supply chain, which ensures the operations run smoothly, such that the profitability of the company is not negatively impacted otherwise. Furthermore, the product differentiation margin is very slight, and perhaps there are only a few means of differentiating a company's product from those offered in the market by the competitors, such as by packaging, such as the strategy used by Lindt, whose strength lies in their sleek packaging. 

On the basis of the above observations, the market structure is the closest to an oligopoly, which is difficult to enter into for a new participant. Therefore, it is not as attractive. 

2. What are the key success factors – what does it take to succeed in this industry?

  • Societal marketing – the concept that Charles Chocolates’ marketing decisions should consider consumers’ wants and their long-run interests could benefit the company hugely. As observed, social trends such as an increase in healthcare practices influence the demand for organic and dark chocolates. Therefore, to succeed in the industry, it is imperative to be sensitive to the social trends and the changes in the buying behavior of the consumers and then capitalize upon these observations by including these in the firm's marketing decisions, which would ensure healthy market share maintenance.

  • Niche Marketing could be another essential means of success in this industry. This is because a large percentage of premium chocolate consumers are "heavy consumers," which suggests that if marketing is focused upon a specific segment of the market. Sales volume could increase if this segment is focused upon. Moreover, it would help consolidate customer relationships with the "heavy users," thereby consolidating a pre-existing market share and eventually adding more to it.

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