Situation Analysis

|Who are you? |Sapid Sweets, producer of exquisite chocolate and confectionery | | |products, sold around the world | |What is your purpose? |Business was started to bring delicious sweetness into the world. | | |Fancy chocolate is for happy occasions, and for when you need some | | |quick energy that tastes good. | |What exactly do you offer the consumer? |Tasty treats of very high quality | |What is your current image and reputation? |High quality, high price. | |What do your customers think of you and your products? |Comparable to overpriced European products. | | |Company is family-run. | | |Products are produced in Canada | |Who are your competitors? |High-end lines of large chocolate companies | | |Imported chocolates | |Where are they located? |Canada | | |USA | | |Europe | |What are the properties of your facilities and equipment? Should|There is enough capacity for the chocolate and candy product line. If| |they be improved? If so, how? |the company adds any new products, a new production facility will | | |need to be constructed.

How big is your marketplace? Is there room for competition? |The high-end chocolate and candy market is C$66 billion world-wide. | | |The top company has a 55% market share. The next biggest company has | | |a 25% market share. The third biggest company has a 12% market share.| | |The remaining 8% of the market is made up of many companies, non with| | |more than 1% of the market share. | | |Sapid Sweets has 0.8% of the world market, with 2004 sales of | | |C$525.69 million dollars. | | |Sapid Sweets is the largest high-end chocolate and candy maker in | | |Canada. | |Are your products and services affected by economic conditions? |Expensive chocolate and candy sales are hurt by challenging economic | | |conditions. People switch to lower-priced products when money is in | | |short supply. | |Do you have reliable suppliers? Do you have alternatives? |Sugar, cocoa, and milk are the main ingredients of the products. A | | |variety of suppliers exist. The prices for products from the big, | | |reliable suppliers are determined by sugar and cocoa exchanges in London.

Niche, specialty suppliers are available. Their products are | | |organically grown, and supply is somewhat reliable, but could be | | |affected by weather conditions more than the main market. | |How do your customers know about you? Advertising is done in specialty magazines, and television | | |advertising that caters to rich, cultured people. | | |Some product placement was done in a recent movie, with limited | | |success. | |How do you competitors market their products? |Our main competitors are much bigger companies with huge TV and print| | |advertising budgets. Their products are available in many department | | |stores, specialty shops, and their own retail stores. | | |Their products are sold in boxes and in individually wrapped items.

Their prices are higher than candy bar-level, but not as high as | | |luxury-level. During typical candy-giving sales promotions (e.g. | | |Mother’s Day, Valentines Day, Easter, and Christmas) they market | | |bigger-ticket items like 5-pound boxes and variety packs. | |Are your products and services unique? |Luxury chocolate and candy companies in Canada are rare. | |Do your products offer benefits that your competitors can easily|The formula for our chocolates is a carefully guarded secret. The | |match? Do they need to be upgraded or modified in any way? |ingredients for some of our flavours come from the far corners of the| | |world, and we buy all the supplier’s production. | |Are they keeping pace with consumer trends? |Demand for our products is slipping; more and more people are | | |becoming health conscious and trying to lose weight. | |Is price a major factor? Should you adjust the price? |Our customers appreciate that our products are exceptional and | | |different.

They are willing to pay more for the special nature of the| | |products. | |Do you have suitably qualified staff? Do you have an ongoing |We have people who are very experienced in chocolate and candy. If | |training program to upgrade their skills? |the company adds new product lines, new experts will be required. | |Are you able to, or do you need to, expand your business or |Consumers have started making a strong move away from products with | |enter new markets? |too many refined carbohydrates. The company needs to find a | | |substitute product to cater to the sweet tooth’s in their market. | |What laws and regulations govern the products you make? |All food products must comply with safety standards. (SS has passed | | |every inspection without fail.) | | |Product labeling laws will soon require that our products show the | | |nutritional facts. This will defiantly not improve sales as the | | |calories and saturated fat levels of chocolate are high. | |What trends in technology affect your products? |New sweeteners are entering the market based on sucralose and stevia.

New products based on these are expected to be very well received. | |Can your company provide a product or service where there is |Studies have shown that there is a 10% annual growth in the energy | |growing demand? |bar market nationally. As well, there is a 10% annual growth in the | | |size of the young professional market. Over 50% of this market is | | |health conscious. Studies have shown that 75% will consume energy | | |bars to sustain them when they are busy. Businesses are placing added| | |demands on employees, and entrepreneurs are working harder than ever | | |to compete. As a result, the market for energy bars is expected to | | |continue to grow, especially in this target market. | |Can your company anticipate a new market that has not yet |Environmentally sound energy bars have potential. | |developed, and provide a product or service for that market? | | |What energy bars are in the market today? |100g bars, sweetened with high-fructose corn syrup, nuts, raisins. | | |Average retail price: $2.00 | |What does it cost to advertise energy bars in Edmonton?

The following is a table of advertising costs: | | | | | |Type of ad | |One time costs | |Location/timeslot | |Location/timeslot | |Location/timeslot | | | | | | | |Cost of one occurrence | | | |30 sec radio ad | |10,000 | |Morning: 500 | |Afternoon: 100 | |Evening: 75 | | | |30 sec TV ad | |50,000 |Morning: 1,000 | |Afternoon: 500 | |Evening: 5,000 | | | |Billboard, 1 month | |2,000 | |Downtown: 10,000 | |Suburbs: 5,000 | | | | | |¼ page newspaper | |500 | |Business section: 2,000 | |Lifestyle section: 1,500 | |Entertainment section: 3,000 | | | |Giveaways at major sporting event | |10,000 for license, 2,500 for staff and posters, plus cost of products | | | | | | | | | |1 year celebrity endorsement | |50,000 fee, plus 10 kg of product | | | | | | | | | |Free sample delivered to 100,000 homes | |5,000 production and printing, 8,000 delivery, plus cost of product test.