-----CASE ------ Purdys Chocolatiers is a company that is rich in history dating back to 1907. Founder, Richard Camon Purdy opened its first store on Robson Street in Downtown Vancouver. Now, it has 79 shops across British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Karen Flavelle bought the company from his father in 1997 and is the sole owner and current CEO of the company. Opening more shops is a strategy to grow sales. However, this strategy is slow, cumbersome, and requires much capital. Karen looks towards eCommerce to boost sales and to have it become a substantial revenue driver. Purdys.com came online with eCommerce enablement in the year 2000 and has since seen multiple revamps to its site. The most current one was completed in June 2016. Kriston Dean, the current Vice President of Marketing & Merchandising has been tasked with expanding and capitalizing on the eCommerce site. It is estimated that each of the 79 shops generates $2 million in annual revenues and Purdys.com generates approximately $5 million in sales yearly.

The Product

It's all about fantastic chocolates, fantastic service and fantastic people. Purdys source their cocoa 100% from sustainable sources. They pay a premium price to farmers to improve the livelihoods of their suppliers. It is a win-win synergistic relationship. Purdys would get high-quality cocoa from farmers and the farmers would be paid a premium over the market price for their cocoa. It is no surprise that Purdy's chocolates are sold at a premium over similar chocolate products sold in specialty stores and well above chocolates sold through supermarkets.

Purdys Chocolates has the following estimated revenue segmentation for its retail stores and eCommerce site (hereafter referred to as Purdys.com):

50% Boxed

25% Seasonal

20% Molded Bars

5% other

Boxed chocolates make for perfect gifts because they are packaged very well and are very presentable and consumers buy it throughout the year. Seasonals are chocolates tailored towards specific seasons. For example, for Valentine's Day, there might be a heart theme or flavor for specific products. Molded bars are lower cost, smaller sized, and plastic-wrapped chocolates. These are mainly used for personal consumption or as small gifts. Please note that between boxed and molded bars, the boxed chocolates dominate gift giving and molded bars dominate personal consumption. Other chocolate types include Purdys ice cream, holiday cards, and related gift-wrapping services. Of course, ice cream is not sold on Purdys.com. However, gift-wrapping and holiday cards might be something to explore more of. Perhaps, exploring the website, Purdys.com, might be an effective way to learn more about it.

On Purdys.com, 266 different products are sold. For gross margins, please refer to "Price".

Sales Channels and Competition in Canada:

In the chocolate industry, the sales channels are supermarket, specialty-stores, and online. These main channels can further be segmented by:

1. Supermarket: Impulse cashier shelves (same assortment of chocolates as the candy aisle, but priced higher due to the impulse nature of the purchase)
2. Candy aisle (lower-priced)
3. Specialty snacks aisle (higher priced)
4. Specialty Stores: Well-priced chocolates (medium range)
5. Premium chocolates (high range)
6. Luxury chocolates (higher range)
7. Ultra-luxury chocolates (highest range)
8. Online: A mix of every type of chocolates from low priced to ultra-luxury.

Purdys main distribution point is through specialty stores which it owns. The secondary sales channel is Purdys.com. Therefore, its main competitors are other specialty-chocolate stores such as Rogers Chocolates which operates 10 stores, is sold through other chocolate stores and supermarkets throughout Canada, and sold through rogerschocolates.com. Another big competitor is Rocky Mountain Chocolate Factory which has 341 franchises across Canada and the U.S. and sells through rockychoc.com in Canada. The largest competitor within Canada is Laura Secord with over 120 stores across Canada with a good online presence.

Location Targeting

Kriston wants to target mainly Canadians with some USA targeting. Chocolate products can ideally be sold everywhere within Canada and exported to the USA. The quality of Purdys chocolates and the shipping technologies used can counteract the slow-melting process of chocolate in hot weather. The key takeaway is that Purdys chocolates can be shipped anywhere at any time of the year.

The Customer

Customer Segments

Purdys has three main customer segments: consumers, businesses, and fundraisers. Consumers account for the majority of sales: 75%. Consumers buy them for a variety of reasons including personal consumption (40%) and gift giving (35%). Fundraisers make up 20% of sales and these include businesses and individuals who create special events to raise funds for different causes. Purdys Chocolates would offer substantial discounts to these groups so that the groups can resell them to raise funds for fundraising causes. Lastly, 5% of all sales are from businesses who buy them for corporate reasons (prizes, gifts to employees, etc.).

Customers of all demographics eat chocolates. However, Purdys is firmly in the luxury chocolates product segment (refer to Sales Channels and Competition in Canada). Therefore, the household income of the ideal customer is in the above median-income range in Canada.

Seasonality

Much of chocolate sales happen during 2 distinct dates: the weeks leading up to Valentine's Day and the 2 months leading up to Christmas. Chocolates, especially chocolates in the luxury market (Purdys), are good gifts for Valentine's Day and for Christmas Day.

The Brand

Clearly, the purple colour is instantly recognizable by Canadians. The current website has splashes of the purple spread throughout site. Kriston strictly enforces the Purdys brand across all channels: retail and eCommerce. Therefore, any marketing campaigns, big or small, have to utilize the branding of Purdys meticulously.

These include:

1. The Purdys logo
2. Brand colour
3. Brand story (since 1907)
4. Proudly Canadian spin on the brand
5. Brand positioning
6. Social Mission
7. Branding and pricing (see "Price")

Price

For different price ranges, please refer to the sales channels and competition section. Purdys is firmly in the luxury chocolates market with a higher range price point. A Purdys 100g molded bar might cost $10 but another 100g molded bar (Cadbury) might cost only $3 at the supermarket. The price premium for Purdys chocolate can be justified through:

1. Branding
2. Premium ingredients
3. Social Mission
4. High overhead costs for operating specialty-stores

The gross margin for boxed chocolates is 40% for Purdys' online store (Purdys.com). This is derived through comparable statistics. This calculation is derived after subtracting COGs, shipping costs (generalized), and applicable eCommerce costs such as credit card fees, software fees, hosting fees, external providers fees, etc. The gross margin for molded chocolates is 25% and it is 40% for seasonal chocolates. The gross margin for the "other" revenue type would be 90% (gift wrapping and holiday cards).

Current Traditional Marketing Strategies

Purdys uses many traditional marketing media such as OOH (ex. transit ads), magazine ads, radio ads, and TV ads. Kriston does not need the winning agency to handle the traditional marketing side of things. Instead, she recommends that any digital marketing strategies should tie in, to a small extent, with traditional marketing strategies.

Current Status of Digital Marketing for Purdys.com

Purdys.com is doing quite well in social media, but there is always room to improve. However, its YouTube channel is faring poorly. This is quite normal because many brands in all industries find it hard to capitalize on the social media marketing aspect of YouTube.

Relative to the large retail footprint of Purdys, the eCommerce store is actually not receiving as much traffic and sales as it should be. Also, the current marketing agency is doing very little to advance digital marketing strategies for Purdys.com. There is very few SEM, SEO, or other digital media types used for Purdys.com. It is also no surprise that the ups and downs of monthly traffic is correlated to the chocolate buying seasons (Christmas, Valentine's Day, etc.). There were 340,000 unique visitors for November 2018 but only 40,000 unique visitors for July, 2018.

Perhaps, finding out more about Purdys.com website metrics might help in showing Kriston how agencies can improve Purdys.com and its eCommerce digital marketing push. In fact, it might be good to know how Purdys.com gets its website traffic. Is it from organic search? paid search? social media sites? referrals? display ads? Then, after finding out, a better plan can be created to improve on Purdys.com's current digital marketing initiatives.

Other forms of digital marketing would also pique Kriston's interest. Perhaps, showing her how you can improve the organic search rankings for Purdys.com might help. Or, proposing an e-mail marketing strategy might also help.

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What is the Target Market (STP) for Prudys? Explain all the STP( Segmentation, Targeting, Positioning ),