Charles Chocolates

CASE PREPARATION QUESTIONS FOR: “CHARLES CHOCOLATES”

1. If you were Steve Parkland, what would you do first?

We need a plan for growth that includes building resources and capabilities within this company. We should address these areas first before expanding outside New England:

• manufacturing and inventory operations –  not efficient

• re-evaluate product selection: batch processing/hand packing, set-up times contributing to significant costs
• look at demand forecasting (for instore/online)/inventories (out-of-stock/over-stock) especially at Christmas; cannot use spike (filling back orders) for production planning in the next year
• look at ways to manage “special order” without halting production for instore/wholesale

• human resources - employees not welcoming change in fear of compromising values/heritage; look at employing sales agent directly with company to sell only Charles products; address leadership issues (Bird/Wholesalers)
• marketing – need a better packing like competitors to attract younger buyers; building out a stronger online presence (59% say they prefer shopping online)
• Revenue – look at closing stores Boston Beacon Hill (-11.5%), Boston Back Bay (-22.35); look at increasing production at Portland Old Port (45.3%) or in Maine

1. Describe the competitive landscape facing Charles Chocolates? Which company poses the

largest competitive threat?

Godiva #1

• glitzy packaging, high price points, and widespread distribution among gift retailers
• standard products: quality less, but was able to obtain 15% higher price point than Charles
• higher-end products: 200% - 300% of Charles prices

Lindt #2

• Sold mid-quality chocolates and pricing was 90% higher than Charles

Cardon

• Most successful in New England
• Price point 35% lower than Charles, moderate product quality level
• Strong corporate present – offer 20%-25% discount on high volume orders

Delice

• Higher quality level, frequent flavor introductions
• 32 retail stores in tourist/downtown areas, packaged in copper boxes, pricing similar to Godiva

Companies like Godiva, Lindt, and Cardon’s all have significantly larger production output, making the cost of production for each unit produced cheaper. Similarly, these brands also have an established name and customer loyalty.