Cowgirl Chocolates’ first ever advertisement was of a beautiful woman wearing a cowboy hot, immersed in a watering trough filled with hot and spicy Cowgirl Chocolate truffles. This ad cost Marilyn $3,000 to run and she wondered if it would help her money-losing business. In 2002, despite not paying herself a salary and occasionally her art for services (she was an internationally renowned ceramicist), her small business generated revenues of only $30,000, while her expenses were over $50,000.
Her product had won many awards from the two main fiery food competitions in the US and had also won awards for the packaging, but she still couldn’t turn her business into a profitable one. Company History Cowgirl Chocolates was founded in Moscow, Idaho in 1997 by Marilyn Lysohir and Ross Coates. Marilyn and Ross created Cowgirl Chocolates to help fund their once-a-year arts magazine called High Ground. Marilyn got the idea from her love for chocolates and hot and spicy food, and found a local candy company to produce the chocolates in quantity. The Product
Cowgirl Chocolates had three basic forms of products: individually wrapped truffles, chocolate bars, and a hot caramel dessert sauce. The individually wrapped truffles were available in a variety of packaging options. The truffles were sold in gift boxes, drawstring muslin bags, a collectible tin, or in a plain plastic bag. The first three packaging options were considered to provide value in their containers, more than just a candy, while chocolates sold in plain plastic bags were for customers who bought them online, just wanted the chocolate and didn’t care about the fancy packaging.
The chocolate bars were available in either orange espresso or line tequila crunch flavors, and the truffles were available in plain chocolate, mint, orange, lime tequila, and espresso flavors. Different flavors were wrapped in different colors to suggest their tastes or to differentiate among them. Mild-mannered truffles were also considered for introduction, which were the same find German chocolate without the spice. Marilyn thought that this product might allow her to get her product placed in retail locations that had rejected her chocolates before for being too spicy.
Also, Marilyn knew that many people didn’t enjoy spicy chocolates, or found at least some of her varieties to be too hot. She was also considering introducing calcium-added chocolate. Marilyn used Seattle Chocolates, a company specializing in producing European-style chocolate confections, as the source for all her chocolate products. Seattle Chocolates took Cowgirl Chocolates on as a private label customer because they liked and were captivated by the company’s product and owners. They provided Cowgirl Chocolates with a small amount of its table space at several important trade shows and produced in half batches for them.
Marilyn hoped that one day Seattle Chocolates would wholesale Cowgirl Chocolates, but before she could, Marilyn knew she had to increase sales significantly. Marilyn made the caramel sauce herself with help from a commercial kitchen in Sandpoint, Idaho. As with the chocolates, she used only the best ingredients. She considered dropping the caramel sauce because it was a lot of work to produce but not profitable enough. If not dropping it, she considered making it a Christmas product only, or hiring a sauce company to make it for her.
But the latter option was costly, as she not only had to pay for the caramel, but also for the jar and delivery. She would also have to provide the labels, for which she would need to have new label designs made to match the jar style the company used. Distribution and Pricing Cowgirl Chocolates was most successive in Marilyn”s hometown, at the Moscow Food Co-op, her single best wholesale customer, accounting for 10%-15% of her annual sales. The product was also available at Wild Women Traders, a high-end women’s clothing and antiques store, Northwest Showcase, an arts and crafts store, and at Bookpeople, an independent bookstore.
Outside of Moscow, Marilyn had more difficulty placing her products. Other places included museums, gift shops, a restaurant, gourmet markets, and specialty food stores focused on hot and spicy foods. Sales were not great, and especially at the specialty food stores. She concluded that if her product was located with similarly priced goods, it would sell, but if it stood out in priced, then it did not sell as well. Several online retailers also carried her products, although sales were insignificant. Marilyn also had her own website, through which sales accounted for about one-third.
Web-based sales captured both the wholesale and retail profits associated with the sale, and most of her sales growth from 1999 to 2000 had come from her website. Marilyn had also tried to get her product into a number of bigger name, upscale retailers, like Dean & Delucca and Coldwater Creek, but they all thought her products were too spicy. Hence, Marilyn hoped that introducing the mild-mannered chocolates will help capture these retailers. Promotion Promotion wasn’t big for Cowgirl Chocolates as Marilyn didn’t know how to best promote he product given her limited resources.
Her first ad would appear in Chile Pepper magazine. Other than the upcoming ad, promotional efforts were focused on trade shows and creating publicity opportunities. Trade shows focused on either the hot and spicy food market or the gourmet food market. At these trade shows, she gave out many samples, and occasionally led to placement of her products in retail locations on a trial basis. However, none really turned into high volume wholesale accounts. Generating publicity included efforts to include her company in article stories, which if it did occur, boosted sales temporarily.
She was also thinking about how to capitalize on the interest the movie, Chocolat, was creating in spicy chocolates. She also thought about hiring a public relations firm, but found them too costly, and did not expect that any publicity a public relations firm could create would generate sufficient sales to offset the cost. She also considered writing a cookbook as a way to generate greater publicity. In addition, Marliyn wasn’t sure how to best promote her product to potential customers. She wondered about seasonal opportunities, including Valentine’s Day and Christmas.
What Next? Marilyn’s financial records showed that her business was not doing well. She had lost more than $6,000 on operations before taxes and had an inventory buildup of $16,848, much more than she had originally expected. If her ad failed, she decided not to use another one in the near future, and was pretty wary of working with distributors; she could not afford to take another gamble on a distributor. She questioned whether she should focus more attention on her online retail sales or on expanding her wholesale business to include more retailers.
She had numerous questions about what to do next and how to improve her money-losing company, which was originally created to raise money to publish her arts magazine. Discussion Questions 1. What are some of the critical strengths and weaknesses of Cowgirl Chocolates that determine the success of this small business? Can the weaknesses be overcome by the strengths of the business? I do not think that the strengths can overcome the weaknesses significantly, unless Marilyn makes considerable changes to the company’s strategies.
While Cowgirl Chocolates indeed has a point of difference, the biggest reason why it is difficult to succeed is because there is too little market attractiveness. The potential for high growth is low and the need for spicy chocolates is not really present. Furthermore, tastes of people are relatively constant in terms of food. While tastes can change, combining chocolate, a product sought for its sweetness, with spice, somewhat seems to defeat the purpose of chocolates being sweet. It is a unique, but weird mix of tastes, and may not appeal to many. 2.
Using the total product view, describe the “hot and spicy chocolate truffle” offered by Cowgirl Chocolates. Based on this product view, do you think this product will be readily accepted by consumers? Why or why not? Core Product: design, an “experience,” gift, multiple uses with the containers, uniqueness Actual Product: package, design, chocolate, quality, taste, additional nutrients Augmented product: free samples, bonus products when bought online, service I don’t think that this product will be readily accepted by consumers because there isn’t much core benefit customers may want from this product.
There also isn’t much additional service or product that assists to purchase and use this product as well. Furthermore, the actual product, while unique in itself, doesn’t have much benefit. 3. Construct a table consisting of the generic marketing mix strategies based on what you know about Cowgirl Chocolates, what marketing mix plan would you recommend to Marilyn and why? I think that Cowgirl needs to promote its product more and increase brand awareness first to help increase sales. Her current brand is unknown, and only a few people know about it.
If the idea of spicy chocolates was more known and promoted, people might try it out more. Also, I think that she should use a kiosk or some of kind of stand near high-traffic areas and give out samples to promote her product because people need to know first what they taste like, and that they are actually enjoyable before deciding to buy them, since most of the people have never tasted spicy chocolate before. Since it may be a completely new product for many people, Marilyn needs to take steps to not only increase brand awareness, but also increase product awareness without having to make people pay for them just to taste.
Also, I think she should take advantage of Valentine’s Day and Christmas to promote her products, buy providing a new experience for people who always purchase the same kind of chocolates every year, and they are the times of year when chocolate sales increase the most. Furthermore, I think that she needs to redo her ad to appeal more to a younger crowd, since the ad seems kind of racy, and might not appeal to youngsters or parents of youngsters, and they are the age group that tend to eat chocolates most.