Thorntons' Strategy Over The Years

Introduction

A number of factors have contributed to the success and problems faced by Thorntons up until 2003. Over the years, the company seems to have lost focus on its original strategy based on product differentiation and spread itself too thin in pursuit of multiple objectives. It is clear that the values on which Thorntons was originally founded were the principal reasons for the company’s initial success in Britain. From the very beginning, a combination of the quality ingredients that Thorntons had used and the manufacturing expertise it had developed for its core products were the key reasons for its success. Indeed, upon originally launching itself in the United Kingdom’s confection industry, Thorntons succeeded in positioning itself as a chocolate specialist and offered a wide range of products (positioned as “top of the line” in the competitive boxed-chocolate market and therefore appealing to a certain market segment). Additionally, one of the company’s competitive advantages came from the freshness and consistency of its hand-made products; these two characteristics were essential to Thorntons’ initial success in positioning itself as a purveyor of specialty chocolate which was of exceptional quality.

In regard to sales, the company’s strategic selling process (through company-owned shops) contributed to this good image and helped Thorntons to position itself as a high class chocolate manufacturer and retailer. Indeed, the advantages of having company owned shops are great, as it is possible to develop relationships with customers and implement loyalty programs. Moreover, by selling through its own retail shops, Thorntons could carefully guard proprietary knowledge such as its top-secret, bestselling recipes. As Thorntons set high standards for its products and employees, operations could be monitored easily and sales progress of chocolate could be tracked. This ability to rely less on franchised stores proved to be efficient, as it was later discovered that franchises of Thorntons would not always succeed in providing the consistent, high quality service of which customers were accustomed (therefore, negatively impacting the trust of potential clients, essential to the company’s reputation in the UK). Furthermore as franchising agreements multiplied, the physical storefronts often occupied inappropriate locations where there was not a sufficient proportion of the company’s ideal target market.

Thorntons’ attempt to expand into the American market in 1982 was a failure and the operation had to be aborted. The company then attempted acquisitions in Europe, assuming that the market would be similar to that of the UK. However, this assumption of the foreign European market was quickly proven incorrect. Thorntons did not properly research tastes and buying habits of the French and Belgian people. As the company had not planned for unforeseen differences in consumer tastes and buying habits, this operation was unsuccessful and cost the company a significant amount of its resources. (It is also important to note that as Thorntons expanded into the French and Belgian market, it faltered in staying true to a consistent strategy. The company should have provided the products it specialized in to this market instead of manufacturing a product that it вЂ?assumed’ would match consumer preferenceвЂ"market studies are therefore essential).

From 1996 to 1999, the company experienced slight increases in sales. This was largely due to the plan developed by the new management team; it consisted of major changes, particularly concerning the location of the shopsвЂ"half of the outlets were closed down and re-opened in what were thought to be better selling locations. This move (although perhaps positively impacting sales in the short-run) likely had a negative impact on Thorntons in the long-run as employee morale was probably damaged as stores were shut down, and relationships with customers were severed.

During this timeframe, the firm also developed the product range to provide a wider variety of products. In 1997, there was a five fold increase in the range of chocolate available to consumers following the introduction of 27 new lines of chocolate. Thorntons also expanded into the ice cream industry and introduced a children’s range. However, the new product lines lowered the image of the chocolates to simple “snacks” or “impulse buys”. In diversifying its product offerings, Thorntons was soon competing in a saturated market with big names such as Cadbury. Also negatively impacting the company was the fact that not all products were proven successful. Thorntons had little experience in the manufacture of ice cream and was soon producing multiple вЂ?mediocre’ products instead of several вЂ?superior’ products. Customers were no longer sure of the quality of Thorntons chocolate and as a result, sales performance was impacted. Although by offering a wide range of products Thorntons could have possibly appealed to a greater number of consumers (including teenagers and children), product offerings were not consistent and this demographic often preferred to stick with well known brands such as Cadbury or Nestle. Therefore, Thorntons’ image as a specialist “chocolatier” was seriously damaged.

Another factor that has always affected Thorntons’ sales results was issues in seasonal sales variations; during certain years, seasonal demands were difficult to forecast and stock-outs occurred, while during other years, over production lead to waste. In order to remedy this difficulty, some preventative measures were implemented. The first concerned a strategy of making sales less dependent on seasonal eventsвЂ"management therefore decided to launch new forms of outlets called “CafÐ"©s Thorntons”. This innovation was a way of developing outlets that would be less exposed to sales variations due caused by seasonal demand. On top of that, other actions were taken, such as refocusing the advertising strategy on the gift segment and putting more emphasis on up-selling potential gifts through mail-order campaigns in an attempt to boost “day to day sales”. The second set of measures was implemented to stimulate the seasonal sales performance. It was agreed upon by management that in order to focus on the improvement of sales, the company must devote additional concentration to product development. This was already a central point of Thorntons’ strategy but it led to duplication within the product range and even more confusion for customers who