Competitor Analysis – Purdys Chocolatier
Business Research Method Research Proposal – Purdys Chocolatier
Competitors and Competitor Products
Purdy’s is Canada’s second-largest chocolate retailer (Purdys, 2020). The company owns fifty (50) confectionery stores across Ontario, British Columbia, and Ontario. The key competitors of Purdy’s Chocolates are Blommer, DipNDip, and Ganong. Other global rivals to Purdy’s are Hershey, Nestle, Mars, ADM, Olam, Cargill, Barry Callebaut, and more. The main products sold by these competitors are Aztec spiced hot chocolate, peanut butter, chocolate peanut butter cheesecake, beef tenderloin with chocolate port sauce, white chocolate apple pops, vegan chocolate ganache swirl cake, cocoa nibs crusted pork tenderloin, and more.
Competitors Power and Market Influence
The competitors of Purdy’s, for example, Hershey, Nestle, and Cargill are strategically aligned inside to win on the outside (i.e., the market). Hershey, for example, is committed to corporate strategy, and this wins the company a competitive advantage over Purdy’s. The competitors’ power and influence to Purdy’s activities can be understood using the Porter Five Forces:
- Threat of new entrants: Existing and new entrants in the chocolate industry bring innovation and new ways of doing business(Eskandari, Miri, & Nia, 2015). This puts pressure to Purdy’s through reducing costs, lower pricing strategies, and adding value to products.
- Bargaining power of suppliers: Dominant positioned supplies can affect Purdy’s margins. Due to this, the profitability of Purdy’s gets lowered(Misevic, Volarevic, & Peric, 2020).
- Bargaining power of buyers: Chocolate consumers demand a lot. However, buyers consider the best offers in terms of price(Eskandari, Miri, & Nia, 2015). This exerts pressure on Purdy’s profitability in the long-run, with the competitors edged to gain.
- Threat of substitutes: Competitor firms are always innovating new products and services. As a result, Purdy’s profitability is poised to suffer(Ken, 2016).
- Rivalry of existing companies: Purdy’s is rivalled by competitor firms for customers, profitability, and market position. This competition affects Purdy’s long-term profitability(Misevic, Volarevic, & Peric, 2020).
Competitor’s Competitive Advantage
Competitive advantage by these rival firms is based on:
- Cost leadership: For example, Hershey, is a low-cost producer compared to Purdy’s. Cost advantage gives these competitors power to pursue proprietary chocolate production techs, economies of scale, access to raw materials(Barney & Hesterly, 2016).
- Differentiation: Some of the competitors, like Nestle, are unique in terms of product diversity, number of buyers, and market research.
- Focus: They have narrowed their focus to certain market segments, and this creates cost leadership and differentiation advantage to the firms(Barney & Hesterly, 2016).
Recommendations and Action Plan
Market Entry Strategy (to Mexico)
The foreign market entry strategies that Purdy’s should adopt when entering Mexico are franchising and partnerships:
Franchising: Purdy’s needs to create a successful brand (e.g. Nutresa – Cremino, chocolate Don Gustavo, and Ibarra Mexican Chocolate. In this strategy, Purdy’s should allow Mexican business owners to open branches using the Purdy’s brand, whereby the franchisee pay Purdy’s a certain fee. This would enable Purdy’s brand to get easily known in Mexico (Ken, 2016).
Partnering up: Purdy’s should partner with Mexico-based businesses to easily get into the Mexican-chocolate market. Although franchising is not an option, Purdy’s needs to partner with a business(s) in Mexico to break ground (Ken, 2016). Mexican-based companies would be interested in partner with Purdy’s given its No. 2 position in Canada’s chocolate industry, desire to expand business, strong financial position, and their desire to expand to Canada whereby they would easily partner with Purdy’s if they decide to expand to Canada market.
Barney, J. B., & Hesterly, W. S. (2016). Strategic management and competitive advantage: Concepts. Englewood Cliffs, NJ: Prentice Hall.
Eskandari, M., Miri, M., & Nia, H. R. (2015). Factors affecting the competitiveness of the food industry by using porter’s five forces model case study in Hamadan province, Iran. Journal of Asian Scientific Research, 5(4), 185-197.
Ken, S. (2016). International market entry strategies, organizational characteristics and the performance of manufacturing firms. Journal of Strategic Management, 2(4), 68-85.
Misevic, P., Volarevic, H., & Peric, M. (2020). The trend analysis of less sugar chocolate confectionery markets. Economic and Social Development (Book of Proceedings), 52nd International Scientific Conference on Economic and Social Development, 4-17.
Purdys. (2020, November 2). Purdys. Retrieved from https://www.purdys.com/about-us