Enumerate Decision Factors
Based on the problem above Godiva has a few alternatives to consider. They could create a marketing plan that is general in conveying their brand image to the USA, Europe and Japan. Considering the differences in market maturity between the three regions, it maybe difficult to successfully market the same luxury brand image to all three with one plan.
Whether or not Godiva chooses to communicate a single international brand image, they must also consider whether or not to create specific marketing plan for Godiva chocolate in the USA, Japan, and Europe markets. Should they adjust advertising downward in the USA to make the products more accessible? Should they adjust upward, targeting younger consumers in Belgium to gain market share? Futhermore, should Godiva segment the European market further between mature markets such as Belgium and Switzerland; growth markets such as Spain and the U.K.; and emerging markets. Godiva must consider how to target customers appropriately, from packaging size and style, to type of chocolate, to flavor of chocolate, each of the above three markets have unique requirements. The downside to a segmented approach is the potential of Godiva’s brand image being different from country to country.
SWOT
Strengths
1. Godiva brand name well recognized.
2. Unique packaging and great taste for luxurious consumer.
3. Established leader in premium chocolate market.
4. Premium Pricing
- Experience with distribution
- International leadership
Weaknesses
1. Sales growth and brand image has stagnated in mature markets such as Belgian
2. Large number of competitors in mature markets.
3. Boutiques in Belgium outdated
Opportunities
- Reinforce luxury chocolate image worldwide
- Reposition Godiva brand in Belgium and grow sales
- Utilize excess capacity by growing sales in Spain and U.K.
- Exploit Corne Toison d’Or brand for product differentiation in Belgium
- Worldwide chocolate consumption of consumers is continually increasing.
Threats
- Consumer preferences for candy bars and personal consumption over luxury gift chocolates
- Cultural differences in markets using common brand image advertising strategy.
- Strong Belgium competitors such as Leonidas going international
Relevant Information
1. Chocolate consumption higher in northern Europe
2. Total chocolate confectionary consumption highest in Belgium
3. USA, UK, Italy, Japan, have highest chocolate consumption growth rates
- Germany, Belgium, Swiss have reached plateau of per capita consumption
4. Chocolate is a mass consumption product
5. Hand worked character of production and refined decoration gives luxury chocolates their status
6. Offered at holidays, and special occasions, not purchased like chocolate bars
- Consumption of chocolate associated with pleasure – pralines offered as a gift
- Luxury chocolates associated with refinement, taste, pleasure, gifts, feminine
- Luxury packaging differentiates pralines as exceptional gift for loved ones
8. Touch, taste, feel of chocolate are purchase factors.
Markets (The triad: USA, Europe, and Japan)
USA
- Growth market
- Direct investment in manufacturing plant
- Desired brand image
Japan
- Growth market
- Highly profitable
- Differentiated packaging
- Desired brand image
Europe
- Split between mature and growth market countries.
- Brand image and offering value in decline in mature market countries especially Belgium.
- Mature: Belgium, Germany and Switzerland
- Growth: U.K., Spain, Portugal, and Italy
Duty-Free:
- Linked to international air travel passenger traffic growth
- Worldwide
- High brand visibility
- Desired brand image
Distribution
Godiva will distribute through upscale stores or boutiques in Europe and Japan. Upscale department stores in the USA, and international airports for Duty-Free. Seasonal in most markets, tied to love holidays such as Valentines Day and Christmas. Godiva’s distribution goal is to follow Benetton model and sell through uniform looking, upscale boutiques worldwide. The worldwide Godiva distribution network is comprised of company owned stores, franchised dealers, and department stores/boutiques. The USA has 895 total outlets, Japan 89, Belgium 57, and the rest of Europe has only 80 outlets.
Pricing Policy
Campbell’s requires a 15% rate of return on capital investments for Godiva. Godiva requires a 35%-40% gross margin.
Packaging
Godiva allows for regional packaging differentiation but does so by themes called collections. These collections are marked by exquisite packaging and seasonal or holiday themes.
The current concern of Godiva is to convey a common image of Godiva Chocolates across the world: the image of luxury chocolate that is typically Belgian. This brand image positioning is working in growth markets, but is not in mature markets such as Belgium. Godiva is looking for a way to continue growing this brand image worldwide and to regain it back home in the Belgian market.
Alternatives
There are two primary alternatives for Godiva to consider: focus marketing efforts on one common luxury brand image worldwide or adjust advertising to make the products more accessible in the USA and develop a renewed brand image in Belgium and the mature European markets in order to reposition the products and grow sales. In either alternative, Godiva must still consider regional: customer needs, marketing plans, product and packaging options, adverting mix and budgets, distribution policies, and promotion strategies.
The alternatives are:
- Do nothing
- Maintain and promote a common luxury brand image worldwide. Do not adjust advertising downward or upward in any market.
- Look at promoting a repositioned brand image and product line in Belgium that differs from the one used for the rest of the world. Adjust advertising downward in the USA to gain accessibility and upward to younger consumers in Belgium to capture more market share.
The advantages and disadvantages of the options available to Godiva are listed below:
Do Nothing
Advantages
Godiva is doing well (sales and profits) in the USA and Japan and is positioned to do well in the U.K., Spain, Portugal, and Italy without making any changes to brand image or marketing plan.
Disadvantages
Godiva sales and brand image in Belgium, one of the two largest per capita consumers of chocolate countries in Europe, are in decline. Without action, brand image will be hurt. Without additional promotion and sales growth in Europe, Godiva’s Belgium plant has unused capacity.
Maintain and promote a common luxury brand image worldwide. Do not adjust advertising downward or upward in any market.
Advantages
Godiva’s brand recognition is worldwide. Consumers universally associate Godiva with luxury and quality. This strong brand equity differentiates Godiva from mass marketers and the price sensitivity of the commodity chocolate product markets.
By projecting and cultivating a universal premium brand image, Godiva does not have to compete on price only or against personal consumption products like candy bars.
High-end consumers equate exclusive brand image and value. If the Godiva brand were promoted otherwise in growth markets such as USA or Japan, or in mature markets such as Belgium, Godiva runs the risk of cheapening or adversely changing consumer opinions and buying habits. Godiva could utilize the Corne Toison d’Or brand to market a competing product to the industrial and mass marketed chocolate market in Belgium without risking impacting Godiva brand image or premium pricing. With the Corne Toison d’Or brand targeted to increasing sales in Belgium, Godiva could focus on specialized promotions to enhance the luxury image with Belgian consumers.
Godiva could maintain a blended push/pull strategy in which advertising pushed consumers to purchase it’s luxury chocolate product as gifts for loved ones, while working to align distribution look and feel which creates the pull of getting consumers into Godiva outlet stores.
Disadvantages
Godiva’s brand image needs a boost in Belgium to reposition for sales growth and lost reputation. Continuing with the luxury brand, premium product marketing position in Belgium without effective marketing, Godiva runs the risk of further diminishing sales and brand image. Godiva may need to spend more for special promotions to regain status in Belgium, thus increasing product cost. Foregoing increased accessibility in the USA, sales will eventually plateau with the high-end consumer base.
Look at promoting a repositioned brand image and product line in Belgium that differs from the one used for the rest of the world. Adjust advertising downward in the USA to gain accessibility and upward to younger consumers in Belgium to capture more market share.
Advantages
Godiva can go after more market share in Belgium by updating brand image with younger consumers and repositioning product marketing and distribution strategies. Godiva could increase USA sales by making the product more accessible.
Disadvantages
Godiva would risk failure of the repositioning resulting in damaging regional and even possibly international brand image.
Adjusting advertising upward, brand repositioning and product line changes would take time and require substantial upfront capital investments. An additional 13million bf advertising budget has been allocated. Improved and reinforced European distribution is also required. Competitors such as Leonidas have the option of matching or countering Godiva marketing plans such that either Godiva does not grow market share in Belgium but ends trading down the current brand image and profitability. Any change that adjusts advertising downward for USA has the risk of cannibalizing current, profitable margin sales and lowering value of brand equity. Currently, USA price level is 2x Belgium and Japan is 4x. Adjusting advertising downward would require much higher sales volumes to make up for decreased prices, and there is no sales forecast that supports this proposal.
Godiva would need to spend more on a push marketing strategy to inform customers about new product and distribution options. In the USA, distribution would need more spending to get product into more accessible outlets. Godiva risks losing the pull of the current upscale distribution channels if it seeks a wider distribution. In Belgium, Godiva would need to work closely with boutiques to enhance the pull to match the upward advertising, resulting in higher costs.
Recommendation
The advertising strategy that Godiva should incorporate should be to maintain a universal brand image that gives Godiva its luxurious reputation. Even though the brand image should stay the same, markets like Belgium will be approached differently than the US and Japan as far as focus and spending.
The advertising message conveyed should be desirable to those to whom it is directed. In the United States and Japan Godiva has a luxurious and prestigious reputation, which Godiva International desires. Godiva is currently successful in these regions, which have a lot of room for growth. Brand image is very important to Godiva and their product. It is what drives them and has created so much success over the years. It would not be beneficial to downgrade that image and lose the reputation that provides a strategic and competitive advantage.
Each of the three markets is in different stages with respect to how Godiva is portrayed. In the United States the product is fairly new, highly demanded, and no true competition. The campaign Godiva should implement for this region should focus on these advantages. On the other hand a unique approach needs to be taken for Belgium because there is extreme competition and the chocolate market is near saturation. Due to the success and growth waiting in the United States and Japan, it would be detrimental to switch advertising campaigns in a location where there is most opportunity.
Belgium is a very important market because it is the world’s highest chocolate consumption per capita. Even though Belgium is a mature market, there is still plenty of growth in other European nations. With their current successful position in the US, they can maintain their campaign while focusing more efforts on how to rebuild the Belgian market. The best approach would be to keep the luxurious brand image. Godiva should utilize the Corne Toison d’Or brand to market a competing product to the industrial and mass marketed chocolate market in Belgium without risking impacting Godiva brand image or premium pricing. They can begin by allocating more costs for advertising in the European market and then use their image to reach out to the younger population and hopefully gain sales and market share. One marketing strategy would give Godiva one common name and reputation. This would still be the most preferential selection to market the chocolate and seek the most opportunity and success internationally.
Plan for Implementing Recommendation
Resources for marketing should be allocated with larger proportions going to countries with the lowest per capita consumption of chocolate candies and have shown an increase in consumption over the years (eg. Spain, Italy, Japan, and U.S.). Marketing should focus on presenting Godiva chocolates as a prestigious gift for special occasions, holidays and self- fulfillment. Special attention needs to be directed to the likes and dislikes of the consumers in these countries. The chocolate being produced for them need to be tailored to their needs in order to maintain and increase market share in these countries. This plan will increase chocolate candies consumption and increase Godiva’s markets share also.
In Belgium, where market share has been lost and their luxurious image has been tarnished, plans should start with the remodeling of Godiva shops to give them a new look that will perhaps draw attention away from local competitors and back to them. As consumption, market share, and product variety increase, Godiva should make plans to increase production capacity in its plants.
Measuring Success
Charles Van der Veken’s, president of Godiva Europe, main concern is to convey a similar image of Godiva chocolates across the world. And this was due to a number of reasons.
In examining the level of consumption reached in some countries, we find out that the consumption in countries like Spain, Italy, and Japan is growing year by year, and one day it could reach a very high level compared to countries like Switzerland, Belgium, and United Kingdom.
And if we analyze the main characteristics in each country where Godiva is distributed, we can find out that in Belgium, the birth place of chocolates, and where consumption is the strongest, the result of a brand image study shows that Godiva is not clearly perceived as very different from its competitors, on items associated with superior quality or a significant quality differential. Also in Belgium, Godiva holds only a 10% market share and Leonidas its main competitor, 43%. More than that Leonidas has a large international coverage throughout the world and a production capacity three times that of Godiva. Therefore, an action is needed especially that the production capacity of Godiva’s Belgium factory is not fully utilized, and there is a significant available capacity.
In France, Leonidas holds the largest market share while Godiva has a small niche. And in Japan, the chocolate market is still expanding and it is very attractive market for Godiva. The market is growing at a rate of about 25% annually, and in USA also the market is growing fast at a rate of 10% annually. That’s why Godiva must take advantage of such opportunities in growth.
If we take a look at Godiva’s pricing and distributing policy, we find out that Godiva’s price differences from one country to another are great. And Godiva has to take action and standardize its retails prices. At the other hand, if we analyze its distribution policy, we can see how throughout the years the boutiques in Belgium have become less and less attractive. As a consequence, the Godiva brand image has aged. Abroad, however, Godiva benefits from an extremely prestigious image. And if they don’t react quickly, they could compromise the world brand image of Godiva.
