Rideau Artisanal Chandlery

Online, Offline or Burst

 Group Members

❑Khalid Bin Abser (212002806)

❑Mohammad Ali Hossain (212003206)
❑Anisur Rahman Mahi (212002106
 About Rideau Artisanal Chandlery
About company

➢ The Rideau Artisanal Chandlery (RAC), located in Westport, Ontario.RAC was

established in 1992 and become the largest manufacturer of artisanal candles in
Canada by 2016.

➢ Distributors: Bed Bath and Beyond, Home Sense, Marshall, and Williams Sonoma

Axel Campbell Johanna Perkins Oleg Fetisov

Sales and Marketing Director of - Founder and owner of RAC - Web designer
RAC - Oleg wife - Johana husband
 Current Scenario
❑ The sales included regular candles and citronella. Both product types were
offered in various scents as lavender, vanilla gateway and morning spice being
the most popular.

❑ More than 80% of RAC's income was made up by 20% of rac's scents. The candles
have been divided into boxes of six (jar, pillar, taper and votive).

❑ Offline sales through distributor or retailers are accounted for 90% of RAC’s total
sales, but volume growth flattened in the second quarter of 2016.

❑ RAC’s online represented a mere 10% of total sales, it accounted for more than
14% of its profit, and volume growth was approximately 15% per month.
Current Scenario
Traditional (Dollar) RAC Online (Dollar)
Obejcts

Variable Cost per Box 4.45 4.45

Fully Allocated Cost per Box 5.50 5.50

Wholesale price’ 8.00 none

Shipping cost per Box none 2.5
Retailer Margin 8.00 none
Price to the consumer 16.00 14
Profit per Box 3.50 6

*Retailer were responsible for shipping costs from Westport to their shops.
Problem: 1

Channels design needs to address four things:

• Demand Generation
• Demand Fulfillment
• After Sales Service
• Market Feedback

Based on the case, analyze how effectively these

functions are performed by the company and by its
retailers?
❑ Demand Generation
Rideau Artisanal Chandlery can generate demand through informing customers
about its point-of-purchase displays, personal selling, and online advertising.

❑ Demand fulfillment
This candle company creates candles with a wide range of scents. Customers
can visit their stores to select their favorite candle scents, and they introduced
an online selling point in 2016 to make it easier to sell.

❑ After sales-service
Generally candles don’t need after sales service. Although RAC collects feedback
from the customer through the website and solve any problems related to the
product. If any issue takes place while buying from the store, the retailer
replaces the product if needed. This is solely done for the satisfaction of
customers.

❑ Market feedback
In order to be effective in the long run RAC collects information on customer
reaction through online selling, personal selling when their previous customers
want to repeat purchase.
Problem: 2

If You Were Johanna Perkins, How Would You

Resolve The Conflict Between Axel (Selling
Offline) And Oleg (Selling Online)? What Options
You Have? Which One Would You Propose And
Why?
Company Scenario

▪ Oleg tend to focus entirely on RAC online to gain 71% of the profit per box but experiencing new
scents seemed very important to introduce to new customers the natural scent of artisan
candles. Beside this, attractive scent “in-store” played a major role in making customer buy more,
even without accounting for the value of increased sales of candles.

▪ In late 2016, negotiations occurred with Home Sense and basically it would share detailed
monthly sales information all artisanal candle in store to exchange for promotional pricing in key
holidays. This would help RAC knows more about its competitors and understand the market
trends. These are valuable information which cannot be found easily. However promotional
pricing will lead to the profit reduction on holidays was just 50 cents per box. In addition, when
RAC Online was introduced, the strong interest of Home Sense have been blurred.

▪ Oleg claimed that sales data from online store provided reliable and immediate feedback on sales
performance of major scent. Hence, Marketing efforts could be maximized behind the most
popular scents. He suggested that RAC Online be used as a source of advertising revenue by
advertising candle accessories, decorative table items, holiday accessories, and patio and
terrace lights. Artisanal candles’ customers were potentially purchase these items.

▪ However, there are only 6 sale representatives for the whole country, so they do not have enough
time to sell online advertising,
Selling Online
Benefits Limitations

1. The price to customers is cheaper 1. All relevant data could not be

than offline pricing. gained from RAC online.

2. The sales data from the online 2. Cannibalizing the offline channel.
store provided precise and immediate
feedback. 3. Not enough manpower for selling
online advertising
3.Marketing efforts could be maximized
behind the most popular scents.

4. Controlling the “interface” with

consumers to collect data and gain
customer insight.
Selling Offline
Benefits Limitations

1. It is easy for the customers to experience 1. Promotional pricing would reduce profit per box
the products (size and scents of the candles). by 50 cents for the holidays.

2. Sharing information in return for promotional 2. Lower profit per box

pricing around key holidays such
3. The price to the customer is higher than online
as Thanksgiving, Christmas and Valentine’s Day. pricing. (16 dollars for the traditional price in
comparison with 14 dollars for RAC online).
3. Providing RAC with detailed monthly sales
information on the entire artisanal candle
category by store.
4. Helping to understand trends in the marketplace
as well as performance of the competitors.
 Recommendation :1
We suggest RAC should remain unchanged their offline platform while upgrade
their online selling to overcome its limitations.
Explanations:

• Offline service is still accounted for 90% of sales, we suggest RAC Offline modality should
remaining unchanged. They should hire few sales people or specialist to acquire and identify
potential partners and customers as well to enhance the business

• Maintain the availability of the product by collaborating with Existing shops and focus on
acquiring partnership with other shops as well.

• During holidays and special events they can partner with distributors to launch new flavors
and arranging special sale campaign which can also help RAC to gain data about market
trends and their competitor performance from their distributors.
Recommendation : 2
We suggest RAC should also emphasize on Online Platform by investing on social media tools
and strategy. They should also focus on social media marketing to increase visitors on their
online platform

Explanations:
• RAC Online has shown impressive growth rate by 15%/ month. The revenue can doubled
with in few years as online platform is now booming for the business.
• This field also shows huge potential to become a forum where they can collect ideas, instant
feedbacks and do the Word of mouth marketing.
• RAC Online be used as a source of advertising revenue. They can earn though advertising
from manufacturers of candle accessories, decorative table items, holiday accessories, and
patio and terrace lights as people who purchased artisanal candles were high-potential
consumers of these items.
• They should run campaign on online platform to collect the revenue from their potential
customer which always attracts new buyers.
Recommendation : 3
RAC Should Emphasize On Developing Logistic & Shipping Facility
Explanations:

• For Online customer they have to spend $2.5 for shipping purpose. If they can enable own
logistic facilities or partnership with 3PL they can reduce the cost.

• Their retailer have to collects the goods from RAC’s store at their own cost. So the retailers
can not compromise with product price. If RAC sent the product to the retailers and
distributors by their logistic facilities which reduce the retailers cost so that they can push
retailers or distributors to reduce the product price minimum 1$ that can balance the price
with online price and impacts on customers purchase behaviors.

• Shipping & Logistic facility make huge impacts product cost and price as well.