“Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”

        Situation Big Questions Ideal Corporate Targets Thought Framework Recommendation Supporting Evidence › Qualitative and quantitative Revisiting Corporate Goals Summary  Supplementary Information

  

Apollo acquires rights to Montreaux for America on June 2011 Consumer Food Group (CFG), a subsidiary, forms Montreaux USA Andrea Torres, director of new development, is faced with multiple decisions

 

Next steps for Montreaux USA?

› How are we launching the product

Time to upgrade logistics?

› Pennsylvania factory



American or European branding?

› Heritage › New product line   Brand Sub-brand 

New product name?

   

National distribution of Montreaux product line $115 million in annual sales by 2015 0.60% market share

› Top 25 in revenue

Acceptable hurdle rate of $30MM

› Needed for full national rollout

    Support each decision with evidence Calculate projections Pros and cons matrix Nielsen’s 12 Product Success Factors

      Name › Euphoria by Healthy Cravings Branding › Apollo sub-brand Features › 70% Cocoa › › › Pouch Bag Format Premium chocolate Health positioning  Slogan Flavours › Pomegranate › › Blueberry Cranberry Price › $4.49 MSRP Acquire Pennsylvania factory

“Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”

Pros

• •

Further Testing The Market

Fine-Tune Consumer Insight Most Limited Liability and Risks • •

Launch in Selected Test Markets

Gather Additional Consumer Insight Most Representative of Market Condition

Stage a Regional Rollout

• • Middle-Of-The-Road Approach Average Expenditures • Discover New Opportunities • Limited Liability and Risks • Begin Market Share Dominance

National Launch

• • • Display Commitment to Retailers Biggest Opportunity to Increase Market Share Greatest Revenue Opportunity

Cons

• Possibly Redundant Data • Long Result Reading Time (1 Year) • Conservative Strategy • Delaying Market Entrance • Delaying Market Entrance • Potential Lost Opportunity • • Difficulty In Finding Suitable Test Markets • Convincing Retailers for Limited Batch Purchases Less than 100% Commitment to Market • Requires New Factory • Most Expensive ($3 MM) • Poor Regional Selection • Limited Production Capabilities • Very Expensive • Requires New Factory • Greatest Resource Commitment

SELECTED LAUNCH PLAN

   

Market Trends Product Choices Capturing the Market

› The Ideal Customer

Mainstream Distribution Channels

      Low-calorie options such as reduced fat and aerated chocolate Premium chocolate products moving to mainstream channels (i.e., supermarkets, mass merchandisers) Dark chocolate popularity rise Packaging transition to stand-up pouches and bigger

sizes

New labeling with terminology emphasizing shareability, portion control, and saving a piece for later Increases in pricing attributable to rising commodity costs

    70% Cocoa concentration › Preferred taste versus 90% in qualitative testing › Emphasize health positioning Bold Flavours › Blueberry, pomegranate, cranberry  Narrowed from top five ‘winners’ Pouch format › Shareability, portion control, economical › 3.5oz – less unique, less revenue generation Healthy Cravings – Apollo sub brand  Confusion in European credibility

“Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”

 Cater to as many demographics as possible › 45-64 Age group › › › Everyday sophisticates Brand loyalists Women Age Socioeconomic Status Consumer Type Gender Differences

  

Older aged upper-middle class female 45-64 age group Motivations

› › › › Personal health considerations Luxurious reward Mood enhancement Enjoys trying out new flavours

  

Purpose

› Identifying ideal launch path

Calculating Sales Projections Chocolate Market’s Future

› Relation to Corporate Goals

 Explaining the details

Pros

• •

Further Testing The Market

Fine-Tune Consumer Insight Most Limited Liability and Risks • •

Launch in Selected Test Markets

Gather Additional Consumer Insight Most Representative of Market Condition

Stage a Regional Rollout

• • Middle-Of-The-Road Approach Average Expenditures • Discover New Opportunities • Limited Liability and Risks • Begin Market Share Dominance

National Launch

• • • Display Commitment to Retailers Biggest Opportunity to Increase Market Share Greatest Revenue Opportunity

Cons

• Possibly Redundant Data • Delaying Market Entrance • Long Result Reading Time (1 Year) • Delaying Market Entrance • Conservative Strategy • Potential Lost Opportunity • • Difficulty In Finding Suitable Test Markets • Convincing Retailers for Limited Batch Purchases Less than 100% Commitment to Market • Requires New Factory • Most Expensive ($3 MM) • Poor Regional Selection • Limited Production Capabilities • Very Expensive • Requires New Factory • Greatest Resource Commitment

SELECTED LAUNCH PLAN

  Calculated all possible sales volumes scenarios using methodology formulas › Market-adjusted trial rates, repeat volume, etc.

› 3^3 = 27 Possible Scenarios Determined sales volumes › Combination of three factors › Awareness type  Marketing campaign effectiveness › › ACV type  Market reach effectiveness Product quality  Repeat rate of consumer

 Calculating repeat volume

Type Awareness

Low Medium High

Type ACV

Low Medium High Low Medium High Low Medium High

# of Trial Households (MM)

2.82

2.82

2.82

3.05

3.05

3.05

3.71

3.71

3.71

2.82

2.82

2.82

3.71

3.71

3.71

4.51

4.51

4.51

3.42

3.42

3.42

4.36

4.36

4.36

5.30

5.30

5.30

Quality of Product

Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent Mediocre Average Excellent

% of Households Repurchasing

28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38% 28% 33% 38%

Repeat Purchase Occasions

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Repeat Volume (MM)

3.16

3.72

4.29

3.42

4.03

4.64

4.16

4.90

5.64

3.16

3.72

4.29

4.15

4.90

5.64

5.05

5.95

6.85

3.83

4.52

5.20

4.89

5.76

6.63

5.94

7.00

8.06

$70,00 $60,00 $50,00 $40,00 $30,00 $20,00 $10,00 $-

Number of Purchases in MM

Retail Sales Value ($ MM) Montreaux Sales Volume ($ MM) Acceptable Hurdle Rate  Band range of ACV, Quality and Awareness

 

Corporate 2015 goals overly aggressive

› Despite double annual market adoption rate

Accomplished national rollout

Chocolate Market Size (BN) Annual Growth Rate Average Montreaux Sales (MM) Market Share 2012 Market 2015 Estimate Aggressive 2015

$ 17.664 $ 19.120

$ 19.120

2% 4% $ 39.02 $ 42.24

$ 45.65

0.22% 0.22% 0.24%

   Acceptable downsides › Taste Findability › ACV focus Product delivery and loyalty › › New factory Perpetual improvement

     Market goals › Nielsen’s 12 Success Factors › Accomplished national rollout Expand manufacturing capabilities › Pennsylvania Montreaux USA marketing plan › Target demographics › Product specifications › Euphoria by Healthy Cravings › › Focus on supermarkets Pouch 70% Premium Cocoa American credibility › Sub-brand of Apollo

“Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”

 Opportunities › Partnering with other firm than the Big Two › › › Develop better infrastructure  Perhaps more factories and manufacturing centers Product specifically targeted to men Virtual integration with Suppliers  Mexico  Risks › Introduction of superior rival product › › › Product not well tested Manufacturing capabilities not up to par Ability to Scale

 Bargaining Power of Buyers ›

Low to moderate

› › › Large volume orders Lack of threat of backward integration Reliance on industry product  Threat of Substitutes › › ›

High

Alternate confectionery available Competition during holidays Threat of Substitutes  Competitive Rivalry Within Industry ›

High

› › › Equally capable competitors Slow growing High storage and fixed costs › High exit barriers Bargaining Power of Buyers Competitive Rivalry Within Industry  Threat of New Entrants ›

Low

› › › › Very expensive manufacturing costs Lack of distribution channels Regulatory restrictions Confectionery and chocolate market relatively saturated Threat of New Entrants Bargaining Power of Suppliers  Bargaining Power of Suppliers › › › ›

Moderate to high

Supplier group is concentrated No threat of forward integration Industry is important customer to supplier Source: http://jmfrrell.blogspot.ca/2011/06/chapter-4-industry-analysisporters-five.html

  Go through retail channels › Supermarkets and grocery focus Premium chocolate moving into this distribution channel

Distribution Channels Breakdown

54,7% 15,8% 11,7% 9,0% 8,8% Supermarkets/Gr ocery Convenience Stores Drugs Stores Big-Box Supercenters Other

Market Share Revenue ($ in MM)

Snack-size Chocolate; 2,522 Bar/Bag/Box (>3.5 oz); 7,149 Bar/Bag/Box( <3.5 oz), 3.479

Seasonal Chocolate; 4,407 Bar/Bag/Box (>3.5 oz) Seasonal Chocolate Bar/Bag/Box(<3.5 oz) Snack-size Chocolate