Post on 02-Dec-2014
S. No.
Name Roll No.
Role
1 Rajat Khullar 63 Group Leader & Member
2 Nitin Nangia 52 Member
3 Rashu Bhalla 66 Member
4 Nitin Mathur 51 Member
5 Neeraj Shukla 48 Member
INDIAN INSTITUTE OF FOREIGN TRADE (IIFT)
Presented By: Group 8Section BMBA (IB) | 2010 – 13
GODIVA EUROPE
HISTORY / BACKGROUND• Godiva was founded in 1920 and was into the business of making
prestigious delicate flavored chocolates.• It was purchased by multinational Campbell Soup Company in 1974
under which it had 3 decision centers.
- Europe- Japan- USA
• It has its headquarter in Brussels, Belgium where in the Company Factory has an annual production capacity of 3000 tons catering to needs of more than 20 countries.
• Godiva Europe has an annual sales of 926 million. Belgium Francs and has its presence in countries like Francs, Great Britain, Germany, Spain Portugal.
• Amongst all Japan is an important market for Godiva because of price of 4000 Bf/ Kg compared to 2000 Bf elsewhere.
• Main reference market for Godiva international consists of Triad Nations.
WORLD CHOCOLATE MARKET • Chocolate has been divided into 4 categories• Bars of chocolate that are filled • Bars of chocolate not filled• Chocolate candies or chocolates (called “pralines” in
Belgium) such as Godiva’s chocolates• Other chocolate preparations.
Two varities of Chocolates produced as per packing
1)Industrial Chocolates which are sold in pre-wrapped generic boxes without brand names.
2)Chocolate pralines which are handmade chocolates with delicate flavour and are packed in branded boxes (luxurious packing).
GODIVA CHOCOLATES IN WORLD
Country Categorization & Usage
Preference Pralines, Bars
Selling Medium Used
Belgium Gifts & Self Consumption
Assorted High end stores & Boutiques
Germany Not very fond of Chocolates
Classic, Chocolate Bars & Pralines
Franchised dealer
France Gifts on special occasion
Drier, bitter chocolates Boutiques
Holland & Italy
Not very fond of Chocolates
Pralines not preferred -
United Kingdom
Not a luxury product Assortment of confectionery products
Upscale retailers (Marks
& Spencer)
Spain & Portugal
Luxury product, gift Pralines Upscale Stores, Franchisees
USA Birthdays, Valentine Days & Christmas
All types Upscale Stores in Shopping Malls
Japan Gifts on Occasion All types -
Duty free For all kinds of usage
All types Duty free shops
CHOCOLATE CONFECTIONERY CONSUMPTION PER COUNTRY
Country
Per Capita Consumption in Kilograms in 1989 Share of
Chocolates in Confectionery
Chocolate Chocolate Candies
Chocolate Confectionery
Belgium 2.65 6.09 43.5%
Denmark 1.17 5.61 20.9%
France 1.69 4.59 36.8%
Spain 0.14 1.21 11.6%
Italy 0.65 1.84 35.3%
Japan 0.44 1.59 27.8%
German Federal Republic
1.64 6.81 24.1%
Switzerland 3.17 9.41 33.9%
United Kingdom 2.96 7.15 41.4%
United States 1.14 4.77 23.9%
EVOLUTION OF CHOCOLATE CONFECTIONERY CONSUMPTION: AVERAGE YEARLY GROWTH RATES, 1980 – 1989
Country
Consumption
(Kilograms per Person)Average Growth
1980 1989 1980 - 100Average
Growth Rate
Belgium 6.04 6.09 100.8 1.76%
Denmark 4.80 5.61 116.9 1.79%
France 3.96 4.59 115.9 1.65%
Spain Nd 1.21 Nd -
Italy 0.92 1.84 200.0 8.00%
Japan 1.09 1.59 145.9 4.28%
German Federal Republic 6.56 6.81 103.8 0.42%
Switzerland 8.44 9.41 111.5 1.22%
United Kingdom 5.48 7.15 130.5 3.00%
United States 3.69 4.77 129.3 2.89%
MARKETING STRATEGIES
• As has been seen with the country wide distribution and target markets, Godiva has spread its wings in major parts of Europe
• Main objective pursued by Godiva was to cover as much European market as they could and to improve upon the sales of Godiva pralines and bring a balance to the profitability in increasing share of the handmade chocolates
• They took Belgium consumer as a reference point which were considered to be fine Connoisseur of chocolates and tested all new flavours on them. If it succeeded with them, then obviously its success was assured through out the world.
PACKAGING STRATEGY
• Packaging is one thing that distinguishes one country from another in order to meet the chocolate consumption habits, for example in Japan chocolates are purchased in small quantities (price factor), wherein beauty of packaging becomes pre-dominant whereas the case is totally different in US.
• Keeping this thing in mind packaging in Godiva is by themes called “collections”, wherein beautiful handcrafted fabric boxes were used illustrating different occasions like Valentine Day, Easter, Mother’s Day, Christmas .
• These boxes were priced on a higher side hence were used for in house storage rather than for sales.
WHY GODIVA COULD NOT PENETRATE IN BELGIUM
• High Labor Cost
• High margins on Rate of Return of Capital
• No Standardization in Rate, boutiques/stores
• Variation in Price regime resulting in loss of volumes
• Poor distribution network
• Competitors selling at low price like LEONIDAS.
Retail Price Comparison among BrandsBelgium France United Kingdom
Brands
(bf/kg)Price
Brands
(ff/kg)Price
Brands
(£/kg)Price
Godiva 1080 Godiva 320 Godiva 13.50
Neuhaus 980 Hediard 640Gerard Ronay
20.00
Corne PR 880 Fauchon 430 Valrhona 16.80
Corne TO 870 Maison ch. 390Charbon
el14.00
Daskalides
680 Le Notre 345 Neuhaus 12.00
Jeff de Bruges
595Fountaine
ch.327 Leonidas 6.75
Leonidas 360 Leonidas 120 Thorton’s 5.80
Measures Taken
The design of boutiques have been revamped
The distribution strategy has been redesigned adding various networks
Changes in packaging making it attractive and eye catching
The Godiva Distribution Netowork
CountryCompany-
Owned StoresFranchised
DealersDepartment Stores
& OthersTotal
outlets
Belgium 3 54 - 57
France 1 19 - 20
Spain - 6 18 24
United Kingdom
2 - 15 17
Italy - 2 - 2
Holland - 2 - 2
Germany - 4 1 5
Portugal - 3 7 10
Total Europe 6 90 41 137
United States 95 - 800 895
Japan - 22 67 89
PRICE COMPARISION OF GODIVA PRALINES IN THE WORLD
Price of One Kilo of Godiva Pralines (bf)
CountryPrice to
FranchiseesRetail Price
(VAT Included)VAT (%)
Belgium 640 1080 6.0
France 763 1920 18.6
Spain 640 2145 6.0
United Kingdom 757 1782 17.5
Italy 640 2009 9.0
Holland 640 1261 6.0
Germany 640 1641 7.0
Portugal 640 2408 16.0
United States Na 2040 -
Japan Na 4000 -
Advertising Strategy
Strategy for Advertising Current Positioning
Consumer Benefit
Promise
Psychographic Characteristics
Competitive Frame
Target Audience
Advertising Objective
Message
Tone & Manner
BUSINESS MANAGERS PERSPECTIVE
• As Business Manager, this case gives us an in sight two brainstorm on strategies applicable for expansion and entry in foreign markets, but also on how to tap the domestic market.
• Keeping in mind the facts given in case it can be well understood that the Godiva being a high-end brand with specialization in hand-crafted chocolates faced a price crunch in Belgium which led to bottlenecks in growth.
• It becomes imperative that while expansion is on, one takes into account not only the PESTEL dynamics of environment but also understand to use the resources available in hand for penetration in market.