REPORT

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APRIL 20, 2015
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Author:!NEREA!GMEZ!LVAREZ!(77153957)!
Module:!STRATEGIC!MARKETING!
LEEDS!BECKETT!UNIVERSITY!

EXECUTIVE(SUMMARY(
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This! report! analyses! and! examines! the! current! market! position! of! the! UK!
chocolate! manufacturer! and! retailer! Thornstons! using! a! range! of! strategic!
marketing!analysis!models!to!identify!and!discuss!the!issues!in!the!case!itself.!A!
brief!history!of!the!company!and!its!operation!is!initially!outlined.!Methods!used!
include! SWOT! analysis,! PEST! analysis,! Ansoffs! Growth! Vector! Matrix! analysis,!
Boston! Consulting! Group! GrowthIShare! analysis,( Porters! Value! Chain! analysis!
and!a!segmentation!analysis.(
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After! taking! the! analysis! into! consideration,! the! discussion! focuses! on! the!
recommendations!for!the!future!strategic!direction!of!Thorntons,!to!become!an!
international! FMCG! (fastImoving! consumer! good)! company! and! to! restore!
profitability!as! customer! focused! multichannel! business.! These!
recommendations! are! based! on! the! results! of! the! previous! analysis,! and!
explained! with! examples.! The! implementation! of! the! different! proposals! is!
explained!at!the!end!of!the!report.!

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TABLE(OF(CONTENTS(
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INTRODUCTION(1(
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ANALYSIS..(1(
EXTERNAL!ENVIRONMENT!(PEST!ANALYSIS)..!1!
INTERNAL!ENVIRONMENT!(SWOT!ANALYSIS)....!2!
ANSOFFS!GROWTH!VECTOR!MATRIX!ANALYSIS....!3!
BOSTON!CONSULTING!GROUP!GROWTHISHARE!ANALYSIS!4!
PORTERS!VALUE!CHAIN!ANALYSIS.!4!
SEGMENTATION!ANALYSIS!6!
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RECOMMENDATIONS(7(
IMPLEMENTATION..!9!
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CONCLUSION..(9(
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REFERENCE(LIST..(10(

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INTRODUCTION)
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Thorntons!is!one!of!the!United!Kingdom's!leading!manufacturers!and!retailers!of!
specialist! chocolates.! However,! the! restructure! situation! of! the! company!
together!with!falling!profits!occurred!in!2013!and!2014!have!led!to!closed!stores!
and! customers! reducing! their! orders! for! next! year.! More! pressure! comes! from!
investment! brokers! recommending! their! investors! sell! their! shares.! Now! the!
company!is!carrying!a!32.9!million!debt.!!
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Jonathan! Hart,! their! Chief! Executive,! has! design! a! project! to! become! a! globally!
effective! confectionary! manufacturer! and! expand! their! brand! outside! British!
boundaries.!They!want!to!become!an!international!FMCG!(fastQmoving!consumer!
good)! brand,! repositioning! the! company! as! a! commercial! rather! than! retail!
business.!
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ANALYSIS)
EXTERNAL)ENVIRONMENT)(PEST)ANALYSIS))
POLITICAL)/)LEGAL)

Expanding! into! a! global! market! determines! the! political! or! legal!

conditions!of!the!brand!depending!on!the!country!of!sale.!
Consumer!policy!can!be!different!in!the!outside!countries.!
Nutritional!laws!can!affect!the!brand!too.!

ECONOMIC)

Cocoa!costs!easing!(Hart!and!Killick,!2014,!p.!42).!
Global! chocolate! market! at! $111bn! has! grown! consistently! since! 2009!
(2.0%!CAGR)!and!is!expected!to!continue!to!grow!(3.15%!CAGR!to!2019)!
(Ibd.,!p.!24).!
Per!capita!consumption!remains!robust!in!the!market!(Ibd.,!p.!24).!
Core! market! remains! resilient:! he! Boxed! Chocolate! Category! has! grown!
38m! over! the! last! 5! years! with! Inlaid! Boxed! a! key! driver! with! 27m!
growth!(Ibd.,!p.!8).!

SOCIOCULTURAL)

Shopper!behaviour!is!changing!(Ibd.,!p.!18).!
Seasonal!demand!variation!in!the!market!(Ibd.,!p.!9,!21).!
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TECHNOLOGICAL)

Increasing!use!of!new!technologies!to!help!the!brand!management.!
Shop!online!systems!(website,!apps):!eQcommerce.!

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INTERNAL)ENVIRONMENT)(SWOT)ANALYSIS))
STREGHTS)

Plan! to! reQconstruct! the! business! is! progressing! with! an! identified!
strategy!(Ibd.,!p.!2,!38).!
Leading!market!share!in!Inlaid!Boxed!(Ibd.,!p.!9).!
Positive!brand!perception!(Ibd.,!p.!14).!
Leading!in!brand!awareness!(Ibd.,!p.!10Q11).!
No.!1!premium!brand!position!in!the!UK!(Ibd.,!p.!4,!6).!
Thornstons!is!a!top!20!global!chocolate!company!(Ibd.,!p.!25).!
Market!leading!bran!values!(Ibd.,!p.!10,!14).!
Highest! advocacy! in! the! sector,! increased! by! broadening! distribution!
(Ibd.,!p.!10,!12Q13).!
Highest!gifting!consideration!(Ibd.,!p.!5,!10,!14).!
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WEAKNESSES)

Source!of!UK!growth!unclear!(Ibd.,!p.!17).!
Source!of!global!growth!unclear!(Ibd.,!p.!26,!27).!
The!brand!does!not!focus!exclusively!on!a!specific!target!(Ibd.,!p.!7).!
Wide!range!of!premium!products!(Ibd.,!p.!6).!!
No!differentiation!compared!to!their!competitors!(Ibd.,!p.!6).!
Warehousing!sometimes!is!unable!to!meet!demand!(Ibd.,!p.!34).!
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OPPORTUNITIES)

EQcommerce.!
Social!networks!to!help!the!brand!management.!
FMCG! new! product! development! (NPD)! focused! on! fewer! and! stronger!
products!launches!(Ibd.,!p.!4).!
Planned! investments! in! the! brand,! people,! business! infrastructure! and!
brand!communications!(Ibd.,!p.!4,!34).!
Want!to!grow!internationally!(Ibd.,!p.!24Q27).!
Key!seasons!(Ibd.,!p.!9,!21).!
Gifting!proposition!(Ibd.,!p.!29).!
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THREATS)

Heavily!indebted:!32,9!million!(brief,!p.!2).!
Reduction! in! retail! portfolio:! Hold! stores! (Ibd.,! p.! 30Q32).! Retail! rightQ
sizing!on!track!and!investing!in!flexible!state.)
Market!pressures!(Ibd.,!p.!41).)
Huge!range!of!brands!competitors!in!the!same!market.)
Reduced! sales! as! a! result!of! the! economic! downturn! or!recession! in! the!
UK.)

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ANSOFFS)
ANALYSIS)
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Current)market!

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New)

market)

GROWTH)
)))))))))Current)product)

VECTOR)

MATRIX)

))))))))))))))))))))))New)product)

Market)penetration)
Product)development)
Inlaid!
boxed!
Continental! single!
confectionary.)
flavour.!
Seasonal!product!(Easter,!
Nostalgia!
Christmas).)
chocolate!blocks.!
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Market)extension)
Diversification))
Growth!of!international.)
Not!clarified!yet.!!

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KEY)ISSUES)
Thorntons! has! a! strong! market! penetration! thanks! to! the! inlaid! boxed!
confectionary! (Ibd.,! p.! 20)! and! the! seasonal! product! launches! in! Easter,!
Christmas! (Ibd.,! p.! 21)! Regarding! to! the! new! product! development! category,!
the!market!shares!of!the!chocolate!blocks!and!the!single!flavour!chocolates!are!
too!low!for!the!moment!(Ibd.,!p.!22),!but!it!can!be!a!normal!situation!taking!into!
account! that! the! market! is! not! familiarised! yet! with! the! products.! The! market!
extension! is! driven! by! the! international! growth! in! key! markets! like! North!
America,!Australia,!rest!of!the!world,!duty!free!and!global!accounts!(Ibd.,!p.!26).!
The!diversification!to!new!products!in!new!markets!is!not!clarified!yet!and!it!can!
be!the!most!important!key!issue!for!the!company.!!
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BOSTON) CONSULTING) GROUP) GROWTHP

SHARE)ANALYSIS)

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KEY)ISSUES)
It!has!been!impossible!to!analysis!more!than!two!products!of!the!company!due!to!
the!lack!of!information.!This!two!products!analysed!are!those!boxed!and!boxed!
inlaid.! According! to! the! relative! share! (calculated! on! the! basis! of! market! share!
compared!to!the!core!market)!and!the!annual!market!growth!rate!in!the!market,!
both! products! are! positioned! as! cash! cows,! products! which! generate! more!
cash! than! they! use! and! can! be! used! for! funding! other! products! or! strategic!
business!unites!(SBUs)!(Lancaster!and!Massingham,!2014,!p.!466).!
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The! purpose! of! this! analysis! is! to! create! a! balanced! portfolio! of! products,! to!
ensure!that!the!company!has!sufficient!net!positive!cash!flow!from!its!cash!cows!
(achieved)! to! fund! its! stars! (high! growth! and! high! share)! and! turn! them!
eventually!into!cash!cows.!According!to!the!report,!it!is!possible!to!invest!in!new!
products!with!probabilities!to!become!stars!or!question!marks!(high!growth!and!
low!share).!
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PORTERS)VALUE)CHAIN)ANALYSIS)
PRIMARY)ACTIVITIES)

Inbound)logistics:!
o Raw) materials) !) FMCG! Systems! investments! (Ibd.,! p.! 17).!
Forward! purchasing! secures! costQprice! certainty! (Ibd.,! p.! 43).!

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Cocoa! price! pressures! easing! (Ibd.,! p.! 42).! Supply! chain! strategy!
designed!to!support!margin!growth!(Ibd.,!p.!5).!

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Operations:!
o Manufacturing) !) No! investment! currently! needed,! continuous!
improvement! ongoing,! extra! shifts/people! as! required! (Ibd.,! p.!
35).!
o Maintenance) !! Strong! and! disciplined! culture! of! cost! control!
(Ibd.,!p.!5).!
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Outbound)logistics)!
o Storage) !) Capacity! and! efficiency! investment,! with! new! 325k!
pallet!warehouse!in!November!2014!(Ibd.,!p.!34).!OutQsourced!and!
unified!warehousing!(Ibd.,!p.!17).!!
o Distribution)!)Broadening!distribution!(Ibd.,!p.!11,!13,!18),!outQ
sourced!distribution!(Ibd.,!p.!17).!
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Marketing)and)sales:!
o Optimising! the! marketing! mix! to! maximise! ROI,! differentiate,! and!
build!shopper!affinity!to!the!brand!(Ibd.,!p.!37).!
o Continue!to!invest!in!brand!communications!(Ibd.,!p.!5).!
o Investments!in!the!brand!and!business!infrastructure!(Ibd.,!p.!5).!
o Strengthen!the!margins!through!clearly!established!brand!position!
and!disciplined!pricing!strategy!(Ibd.,!p.!5).!
o Account!management,!trade!marketing!and!category!management!
not!clear!(Ibd.,!p.!17).!

Service:!
o Investing!in!people!to!inspire!legendary!customer!service!(Ibd.,!p.!
30).!
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SUPPORT)ACTIVITIES)

Firm) infrastructure) !! Investments! in! business! infrastructure! not!

clarified!(Ibd.,!p.!5).!

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KEY)ISSUES)
This! theory! suggests! that! activities! within! an! organisation! add! value! to! the!
service! and! products! that! the! organisation! produces,! and! all! these! activities!
should!be!run!at!optimum!level!if!the!organisation!is!to!gain!any!real!competitive!
advantage.! Although! the! broad! categories! of! value! activities! are! common! to!
most! organisations,! individual! components! of! value! activities! will! tend! to! be!
company!specific!(Lancaster!and!Massingham,!2014,!p.!421).!

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As! we! can! see,! Thorntons! wants! to! add! value! to! the! company! thanks! to!
investments! in! the! different! activities,! but! the! specific! strategic! measures! to!
achieve!it!and!the!cost!of!them!are!not!clearly!expressed.!One!of!the!key!issues!is!
that!with!the!information!provided!in!the!Strategy!Presentation!is!not!possible!to!
know!the!current!situation!of!the!company!compared!to!its!competitors,!not!in!a!
detailed!way.!
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SEGMENTATION)ANALYSIS)
The! brand! currently! offers! three! different! targets! depending! on! the! products!
offered!within!the!premium!category:!
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SAFE)SPENDERS)
Chocolate!is!seen!as!an!occasional!treat!!either!if!theres!some!going!around,!or!
if!they!deserve!it.!Taste!and!quality!are!important,!but!value!for!money!is!the!key!
for!this!group!(Ibd.,!p.!7).!For!this!group!the!Entry'Level'Premium'category!has!
been!designed,!a!tradeQup!from!the!mainstream!brands!(Ibd.,!p.!6).!
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TASTY)TREATERS)
Chocolate! lovers! who! are! always! open! to! a! little! treat.! Theyre! open! to! new!
flavours!but!theyre!just!as!happy!to!play!it!safe.!For!them,!chocolate!is!less!about!
adventure!and!experimentation!and!more!about!a!regular!tasty!treat!(Ibd.,!p.!7).!
For!this!group!the!Premium!category!has!been!designed,!an!alternative!for!the!
other!premiumQbrand!(Ibd.,!p.!6).!
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CHOOSY)CHOCOHOLICS)
Passionate!about!chocolate!and!more!discerning!chocolate!lovers,!always!on!the!
lookout! for! new! tastes! and! new! indulgent! experiences,! demanding! more! and!
spending!more!to!get!it!(Ibd.,!p.!7).!For!this!group!the!Premium'Plus'category!
has!been!designed,!an!affordable!alternative!to!luxury!brands!(Ibd.,!p.!6).!
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KEY)ISSUES)
After!analysing!this!three!target!groups,!it!can!be!observed!that!the!brand!is!well!
positioned! as! a! company! for! premium! shoppers.! There! are! many! differences!
between!the!three!targets!groups!involved!within!this!category!and!their!habits!
tasting!the!chocolate!products.!
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These!segments!are!based!on!behavioural!segmentation,!which!includes!factors!
as:!occasions!for!purchase,!user/usage!status,!benefits!sought!and!loyalty!status.!!

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Although! the! broad! categories! of! value! activities! are! common! to! most!
organisations,!individual!components!of!value!activities!will!tend!to!be!company!
specific!(Lancaster!and!Massingham,!2014,!p.!91Q92).!
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The!purpose!of!the!brand!is!to!design!a!separate!market!product!range!for!each!
market! segment! (differentiated! market).! But! the! range! of! products! offered! to!
these! targets! is! not! fulfilling! an! empty! market! niche,! which! helps! the! brand! to!
differentiate! itself! from! its! competitors.! This! can! be! a! big! key! issue! taking! into!
consideration!the!wide!range!of!brands!within!the!same!chocolate!market.!
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RECOMMENDATIONS)
After! taking! the! analysis! into! consideration,! the! discussion! focuses! now! on! the!
recommendations!for!the!future!strategic!direction!of!Thorntons,!to!become!an!
international! FMCG! (fastQmoving! consumer! good)! company! and! to! restore!
profitability!as!a!customer!focused!multichannel!business.!!
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One!of!the!main!objectives!that!the!company!wants!to!meet!is!the!repositioning!
of!the!brand!as!a!commercial!rather!than!retail!business.!Commercial!marketing!
is! pitching! goods! to! corporations! and! individuals.! The! goal! of! commercial!
marketing!is!to!develop!a!relationship!between!the!client!and!the!product.!This!is!
achieved!by!creating!a!brand!identity!with!which!the!consumer!can!relate.!!
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Thorntons! intends! to! position! itself! as! a! premium! quality! product! at! a! very!
reasonable!price.!However,!as!has!been!extracted!from!the!analysis,!the!number!
of! brands! offering! similar! products! is! too! broad! and! Thorntons! positioning! is!
not! differentiated! from! other! companies.! It! can! become! a! huge! problem! when!
the!chocolates!are!sold!as!FMCG,!cause!these!products!require!low!involvement!
and! the! brand! consumers! can! turn! to! be! easily! switchers.! The! brand! must!
therefore!offer!a!differentiating!feature!from!other!competitors.!!
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One! of! the! approaches! can! be! the! gifting) proposal.! The! aim! is! to! create! the!
idea!that!the!brand!is!the!best!choice!for!buying!one!of!the!sweetest!gifts!in!the!
market.!Thereby!the!problem!of!seasonal!product!selling!can!be!solved!too,!as!it!
is!extended!to!more!general!and!ongoing!celebrations!like!weddings,!birthdays,!
Mother's!Day,!Valentine's!Day,!a!new!job...!and!all!that!special!occasion!that!can!
be!celebrated.!!
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Another! way! to! make! these! products! more! differentiated! in! the! market! is! the!
creation! of! customized) products! that! offer! consumers! the! option! of! choosing!
the!chocolates!inside!the!box!and!package!decoration,!according!to!de!different!
celebrations.! Possibly! creating! a! small! stand! inside! the! retail! or! supermarket!
(modernising) inPstore) environment)! would! be! enough! for! the! consumers! to!
chose!their!favourite!without!being!forced!to!opt!for!a!limited!and!specific!range!
of!chocolates!category.!!
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Moreover,! this! will! allow! the! company! to! develop! an! exhaustive! study! of! the!
consumers! favourite! products! and! it! will! facilitate! warehousing! and! stock.! In!
addition,! this! will! allow! the! company's! investment! in! the! new) product)
development)(NPD)!for!more!specific!consumers!as!chocolate!with!less!sugar!or!
designed! for! coeliacs,! for! example.! This! will! also! simplify! the! Thorntons! target!
groups!and!it!will!clarify!more!precisely!the!niche!markets!that!need!to!be!filled.!
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Other! option! to! differentiate! Thorntons! from! the! others! brands! is! to! wrap)
environmentally!all!their!products.!It!is!known!that!environmental!protection!
by! brands! is! increasingly! popular! among! consumers.! The! idea! is! to! create! a!
wrapping!paper!whose!production!wastes!the!least!amount!of!natural!resources!
possible!and!100%!recyclable.!
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Another!factor!that!the!company!could!exploit!is!the!online) shopping!through!
the!website.!Using!EQCommerce,!Thorntons!can!expand!their!market!to!national)
and) international) markets! with! minimum! capital! investment.! The! company!
can!easily!locate!more!customers,!best!suppliers!and!suitable!business!partners!
across! the! globe.! Gathering! and! using! demographic! data! through! web! contacts!
and! social! media! can! help! to! target! the! business! too,! engaging! customers! for!
launching!new!products!and!services.!!
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After! analysing! the! study! of! international! sales! through! the! website,! the!
company! will! know! exactly! the! most! important! and! costQeffective! points! in! the!
globe! to! start! a! not! too! large! franchises) system,! if! desired.! The! better! market!
penetration! will! in! turn! generate! increased! sales! volumes! and! stronger!
purchasing! power,! via! which! the! organisation! can! command! greater! discounts!
from! its! suppliers.!Moreover,! the! franchise! system! can! provide! a! very! costQ
effective! route! for! business! development,! and! it!requires! only! a! simplified! and!
relatively!lowQcost!management!system.!
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IMPLEMENTATION)
The! implementation! of! these! recommendations! in! the! business! will! be! a! longQ
term! process! that! will! require! a! large! investment! of! money! for! the! company! at!
the!beginning.!Nevertheless,!over!time!these!changes!will!begin!to!create!bigger!
profits! than! before! and! the! company! will! be! able! to! achieve! the! objectives!
specified! in! the! briefing.! Once! the! implementation! process! is! completed! there!
needs! to! be! a! period! of! monitoring! and! assessment! of! the! functionality.! This!
needs! to! be! done! so! that! the! investment! is! not! wasted! and! the! system! is!
thoroughly!effective.!
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CONCLUSION)
A!marketing!strategy!long!term!has!been!developed!to!meet!the!objectives!and!
challenges! proposed! by! the! company.! After! an! exhaustive! analysis! of! problems!
involving! the! current! situation! of! the! company,! a! list! of! recommendations! was!
prepared!with!the!main!objective!to!reposition!the!brand!as!a!FMCGs!company!
through!techniques!such!as!the!gifting!proposal,!the!customised!products,!the!
modernising!of!inQstore!environment,!the!new!product!development,!the!online!
shopping!and!the!franchises!system.!
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This!new!business!plan!will!allow!the!company!to!pay!off!its!current!debt!and!to!
create! profits! through! investments! in! the! future.! In! addition,! the! international!
expansion! plan! also! helps! the! progressive! growth! of! the! company,! positioning!
itself!as!a!prestigious!chocolate!brand!chocolate!that!offers!reliability!and!quality!
service!at!the!best!price.!
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REFERENCE)LIST)
Lancaster,! G.! and! Massingham,! L.! (2014)!Essentials' of' marketing' management.!
New!York:!Taylor!&!Francis.!
!
Hart,!J.!and!Killick,!M.!(2014)!Thorntons'Strategy'Presentation.!
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