Montreaux Chocolate USA:

Ready for Healthy Dark

Chocolate?

Are

Americans

Q1: Key Challenges and Marketing Issues for the new

product
line
Name is the Game: Apollo held a 15.4% share in U.S. Confectionery markets,
making it second
highest in market share after Fishers in 2011.Such big market
shares would imply stronger
associations of Apollo with that of its confectioneries. The new associations
with Apollo would
be challenging to predict, as they have, till now, never tested the waters with
chocolates. All the
more intriguing challenge would be to decide, under what brand the
product should be
forwarded. Is it through the old and connoted Apollo or the
brand Montreaux to which the
consumers may not confide upon?
Taste vs Health: Deciding upon either taste or health would end up with an
obvious trade-off as
both factors propose a strong potential market. This decision would reflect on
the whole product
line which may be laid in the future. Health was the primary
messages proscribed by second
BASES yet the secondary message taste is not to be ignored.
New-product Success Factor:

a) Salience:

a. Distinct Proposition: Montreaux proposes to offer innovation by

understanding
the wants of the consumers. It proposes to deliver healthy foods
without
compromising on taste by offering pomegranate, cranberry and blueberry
flavors
which is quite novel in taste combinations.
b. Attention Catching: Ingenious combinations such as cranberry,
pomegranate etc.
are quite innovative and hence garner the required attention from the
consumer.
Such communications indulge the consumer into selective attention as
the
physical stimuli is most likely noticeable by value proposition which are
highly
relevant to their need (Ex: Healthy , Low calorie ) and
are largely deviated
from the normal stimuli (achieved here through taste).

For those who are not the immediate target market, messages as these
would
comply with the attitudes and beliefs of the consumer; hence selective
retention
would mean building the consumer brand knowledge.
b) Communication:
a. Message Connection: Since the target customers are 45- 64 years old and
mainly
females (accounting for 94% affinity against men with 90%) concerned
about
health and weight with a proviso of a sale. The female are most likely
to
experience the chocolates as a personal reward and a mood enhancer.
The
package should reflect the same with discount offers for more sales.
This would
convince the men too as they are directed most among any other values
proposed.
A trade-off in doing so would be to giving upon the men and catering to
women
who prefer premium or specialty ones which add up to only 19.7% of
the
chocolate market in U.S.
b. Clear, Concise Message: The promotion or the packaging should
deliver precise
and accurate messages. Words such as Mood Changer ,
Healthy bite would
attract the attention of women in U.S. as they are more inclined towards food
that
are healthy (low B.P and cardiovascular fitness). In case of men, quick
energy,
Easy bite would do since a clear and concise message would
deliver the
message short and sweet.

c) Attraction:

a. Need / Desire: Identify the age groups who prefer Dark Chocolate.
b. Advantage: The product is ahead of its competitors by staying
different through
value proposition.
c. Credibility: This factor is extremely important for new products as they are
not in
their comfort zones while trying out the product. If it is a success it could add
to
the brand knowledge and association.

d. Acceptable Downsides:Identifying the downsides way before the consumer

or the
customer does, gives an edge for the marketer.

d) Point of Purchase:

a. Find-ability: The case describes that the consumers purchase at super

markets is
fairly equal doing so in candy aisle and at checkout points.
Out of sight Out of mind is the mantra during shelf placement!of
the products
in the super markets. Product placements affect the purchasing
behavior of the
customer. According to the case, the affinity towards consumption of
dark
chocolate increases as people grows older.And since our target
customers are
adults (Population: 92% of total population as on 2010 which is 188,212
which is
approximately 60.9% of the total population) and they are more than
50%, it is
ideal to have an eye-level shelving . In waist-level
shelving, visibility
variation becomes major influence on product sales.
b. Acceptable Costs: Price and other obscure factors such as calorie
counts will
contribute to the acceptable costs the consumer is willing to make.
e) Endurance
a. Product Delivery:It is basically the say-to-do ratio which the company
promises
to deliver. The more consistent the product is in delivering the assurance the
more
loyal the consumer would be towards youre the products.
b. Product Loyalty:Meeting the expectations of the consumer and
staying ahead of
the competition would bring certainty in loyalty.
Howzat Bro! : Being pioneers at chocolate making do not discount Montreaux
from conducting
an ethnographic survey as the tastes of Americans need not match
that of the Europeans. The
product should connect to the consumers by delivering the values proposed.
Need for BASES II: BASES II is time consuming and the fact that
contenders are on your tail
would only mean quicker and appropriate actiona are a must.Hence a
further refined focused
group
testing
would
mean
larger
work-force
working
towards
minimization of point errors.
Instead focusing on the production facilities would help facilitate in

smoothening of the process.

Sources:
!
http://articles.economictimes.indiatimes.com/2010-0120/news/27572872_1_shelf-spaceproduct-shelves

Q2:

ARE OBJECTIVES ACHIEVEABLE?

David Raymond, a marketing director in the new marketing division

committed to achieving the following goals by year-end 2015:
National distribution of the new montreaux product line $115 million in
annual sales
Be in top 25 in revenue(0.60% market share ).These goals can be achieved
by Apollo as Apollo has revenue of $54.4 billion in 2011 and net
income of $3.5 billion and acquired the number two position in the Global
market with a share of 15.4%.The US confectionary market has a total
revenue of $35.648 billion in 2011 with a 2.8% growth rate between 2007
to 2011.The revenue for chocolates in this confectionary market has
increased 30% from 2007 to 2010. The US chocolate market is expected to
grow at 2% by 2015.
To create a market of a European chocolate which leads the global market
share of confectionary market and is 2ndin the global market with 33.2% has
to be done keeping in mind the European culture rather than branding it
as a complete American product. People know Apollo mainly because of
gums and candies and with this only it ranks number 2 in global
confectionary business. Hence this decision of Apollo to collaborate with the
Swiss company would be fruitful.
Also Apollo in the past 3 yrs has innovated 70 new products and all
have been successful so there is a strong brand value that Apollo
carries with it which would be beneficial. Since the consumers in US
focus on fitness and health which has been sharpened in the last three
decades, Apollo have an upper hand in launching the montreaux dark
chocolate as it is low in calorie and as it has more of cocoa content. Seeing
the U.S chocolate market trends in 2011 which includes low calorie options,
dark chocolates sales benefiting from flavones etc. would be beneficial
in achieving their goals. Also since they have analyzed the U.S market so
well regarding the dark chocolates lovers they can achieve their goals very
easily.
A possible hindrance to their achievability could be number of competitors
and the rate of new
product introduction.

Q3: Consumer Attitude and Motivation towards new

product concept
To understanding the consumer behavior we need to analyze the motivation
that is forcing the customer to exercise his / her choice. DARK CHOCOLATE,
ONCE CONsiDERED A RARE TREAT is NOw MAiNsTREAM
PRODuCT
Before we dwell into all the charming benefits that a dark chocolate possess,

we should first
look at the chocolate industry as a whole which fared seemingly well in the
times of unsteady and lagging economy, growing 19% from 2007 to 2012.
This growth can be attributed to consumers demand for affordable luxuries or
indulgence, as well as the foodie culture that has increased interest in
premium, high-quality and artisanal varieties of chocolate. Yet on account of
countering trends the industry will face slow sales growth 15% from 2012
2017. Consumer Attitude: Even though the Research predicts that by
2020 the demand for cocoa would increase by 30% outstripping the supply,
leading to higher prices of the chocolate, especially the Dark chocolate,
consumer demand for the affordable indulgence that chocolate provides is
expected to remain and interest in chocolate as part of the larger food culture
will continue.
Secondly, when it was further analyzed, the consumption trend for
chocolate was observed that 89% picked up chocolate as a treat/ reward to
themselves. 87% considered it as a favourable snack option. 83% bought
chocolate much because of its value for money size.
72% were concerned with the energy and fitness factors that a Dark
chocolate has to offer.
Coming onto the importance of Dark Chocolate, more importantly from
the perspective of the Montreaux USA, there has been a paradigm shift in
USA where customers are attracted towards the Dark chocolate over the ageold favourite Milk chocolate.
It has been noted that the increasing demands in the US chocolate
confectionery industry is due to the increased demand for the ones high on
cocoa.
Dark chocolate's share of the U.S. market for chocolate bars will
approach 20% this year, from just over 18% in 2008, according to
Euromonitor
The reasons for this are:

Increase in the number of customers who are fitness freak. The

benefit of having the high cocoa content is having a lower sugar
content and that's what would appeal to calorie-counters.
Even the customers in the age group of 40-60 are preferring dark
chocolate to milk
chocolate as it has huge nutritional value compared to the milk chocolates.
The flavanol
content of the dark chocolate helps significantly in maintain Blood pressure
and also as
studies prove provides UV protection for the skin.
Some 46% of men age 55+ and 48% of women over age 55 favor dark
chocolate,
followed by 38% of men that prefer milk and 40% of women that also prefer
milk. These
numbers are indicative of the trend toward the increasing favor for dark
chocolate.
Indeed, 73% of all chocolate consumers are aware that dark chocolate is

healthier.
Therefore taking into account all of these factors and changing trend in the
chocolate industry the Montreaux USA target audience were: Women (94%
v/s men 90%) , People aged 45-65, Educated college youngsters who were
more conscious about health and fitness and lastly
consumers having household income of $50000 and above.
Moreover Montreaux concept of coming up with mini bars were also
favourable and viable
because as mentioned approx 40% of the adults indulged in dark chocolate in
mini snack sizes
which satisfied their taste and also was low on calories. A possible hindrance
to their achievability could be number of competitors and the rate of new
product introduction.

IV: Forecast Model for Dark Chocolate using BASES II

Testing in August 2012
Projections and calculations:
Purchase Volume Estimate, Year 1
Trial Purchase Intent
Definitely would buy
23%
% of "Definites" who actually buy
80%
"Definite" Purchase
18.4%
Probably would buy
40%
% of "Probables" who actually buy
30%
"Probable" Purchase
12%
Trial Rate (Definite + Probable)
30.4%
Hence 30.4% (10.2027264 MM / 36.48 MM) of target market who would buy
the product
atleast once.
Marketing Adjusted Trial Rate (Trial Rate * Awareness * ACV)
Low Support C.A * Low ACV 2.5536%
Low Support C.A. * Medium ACV
2.7664%
Low Support C.A * High ACV
3.36224%
Medium Support * Low ACV
3.1008%
Medium Support C.A * Medium ACV
3.3592%
Medium Support C.A * High ACV
4.08272%
High Support C.A * Low ACV
3.648%
High Support C.A * Medium ACV
3.952%
High Support C.A * High ACV
4.8032%
Average 3.51424%
Standard Deviation 0.6977%
Range with S.D.
2.81654% - 4.21194%

Range

2.5536% - 4.8032%

Trail Households (Households * Marketing- Adjusted Trial Rate)

Households
120 MM
Range of Trial Households with MATR 2.5536% - 4.8032%
5.76384 MM

3.06432 MM

Repeat Volume (Trial Households * % Households Repurchasing * Repeat

Purchase
Occasions)
Repeat Purchase Occasions
4
% Households Repurchasing Mediocre Product with 28%
3.432 MM
6.455 MM
% Households Repurchasing Average Product with 33%
4.0449 MM
7.6082
MM
% Households Repurchasing Excellent Product with 38%
4.6577 MM
8.76103
MM
Total Volume (Trial + Repeat Volume)
14.52487 MM

7.72202 MM

Retail Sales Volume ( Retail Selling Price * Total Volume)

$65216666.3
Montreaux Sales Volume (Retail Sales Volume * 0.65)
$42390833.095.

$34671869.8 $22536715.37 -

V: Evaluation of NPD Process

Changes recommended for Apollo:
The team assistance provided to Andrea Torres, Director NPD, did not
comprise of experts who dealt with American chocolate consumers. Instead
they relied on the expertise of Montreaux team which did not cater to the US
market till then. Hence choice of the 45 ideas (prior to collaboration with
Nielsens BASES) might not have considered tastes relevant to US market.
Another recommendation for montreaux is that they should have chosen
another company in US, who were already the market leaders in the
chocolate industry to launch their brand. A third recommendation is that
billng counters in malls, starbucks shelfs, exhibition stalls could be used to
market the introductory packs. And also since Apllo specializes in candy and
gums, introduction of fancy cookies, dark chocolate gums and lacto dark
chocolate candy can be done.

5. SWOT ANALYSIS
Strength

1. Apollo as a brand.
2. Strong R&D.
3. Brand awareness
Weakness
1. Non acceptance of brand
2. Apollo never had any experience in
chocolate market
3. Cost incurring and risk involved
Opportunity
1. New market to explore
2. Leverage on the health benefits of dark
chocolate
Threat
1. Competition
2.Nation wide Acceptance of the dark
chocolate
3. Competition from other confectionary items