“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
“Introducing Euphoria
 Flavours
› Pomegranate
Pomegranate by
› Blueberry Healthy Cravings –
› Cranberry Reward yourself with
 Price happiness and good
› $4.49 MSRP health”
 Acquire Pennsylvania factory
 Further Testing The Launch in Selected Test
Stage a Regional Rollout National Launch
Market Markets
• Gather Additional Consumer • Middle-Of-The-Road • Display Commitment to
Pros • Fine-Tune Consumer Insight
Insight Approach Retailers
• Most Representative of Market • Biggest Opportunity to
• Most Limited Liability and Risks • Average Expenditures
Condition Increase Market Share
• Greatest Revenue
• Discover New Opportunities • Limited Liability and Risks
Opportunity
• Begin Market Share
Dominance

• Long Result Reading Time (1

Cons • Possibly Redundant Data
Year)
• Conservative Strategy • Very Expensive

• Delaying Market Entrance • Delaying Market Entrance • Potential Lost Opportunity • Requires New Factory

• Difficulty In Finding Suitable Test • Less than 100% Commitment • Greatest Resource
Markets to Market Commitment
• Convincing Retailers for Limited
• Requires New Factory
Batch Purchases

• Most Expensive ($3 MM) • Poor Regional Selection

• Limited Production Capabilities 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 “Introducing Euphoria
› 3.5oz – less unique, less revenue Pomegranate by
generation Healthy Cravings –
 Healthy Cravings – Apollo sub- Reward yourself with
brand happiness and good
 Confusion in European credibility health”
 Socioeconomic
Status
 Cater to as many
demographics as
possible
› 45-64 Age group
› Everyday Consumer
Age
Type
sophisticates
› Brand loyalists
› Women

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

Further Testing The Launch in Selected Test

Stage a Regional Rollout National Launch
Market Markets
• Gather Additional Consumer • Middle-Of-The-Road • Display Commitment to
Pros • Fine-Tune Consumer Insight
Insight Approach Retailers
• Most Representative of Market • Biggest Opportunity to
• Most Limited Liability and Risks • Average Expenditures
Condition Increase Market Share
• Greatest Revenue
• Discover New Opportunities • Limited Liability and Risks
Opportunity
• Begin Market Share
Dominance

• Long Result Reading Time (1

Cons • Possibly Redundant Data
Year)
• Conservative Strategy • Very Expensive

• Delaying Market Entrance • Delaying Market Entrance • Potential Lost Opportunity • Requires New Factory

• Difficulty In Finding Suitable Test • Less than 100% Commitment • Greatest Resource
Markets to Market Commitment
• Convincing Retailers for Limited
• Requires New Factory
Batch Purchases

• Most Expensive ($3 MM) • Poor Regional Selection

• Limited Production Capabilities 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
# of Trial % of Households Repeat Purchase Repeat Volume
Type Awareness Type ACV Quality of Product
Households (MM) Repurchasing Occasions (MM)
2.82 Mediocre 28% 4 3.16
Low 2.82 Average 33% 4 3.72
2.82 Excellent 38% 4 4.29
3.05 Mediocre 28% 4 3.42
Low Medium 3.05 Average 33% 4 4.03
3.05 Excellent 38% 4 4.64
3.71 Mediocre 28% 4 4.16
High 3.71 Average 33% 4 4.90
3.71 Excellent 38% 4 5.64
2.82 Mediocre 28% 4 3.16
Low 2.82 Average 33% 4 3.72
2.82 Excellent 38% 4 4.29
3.71 Mediocre 28% 4 4.15
Medium Medium 3.71 Average 33% 4 4.90
3.71 Excellent 38% 4 5.64
4.51 Mediocre 28% 4 5.05
High 4.51 Average 33% 4 5.95
4.51 Excellent 38% 4 6.85
3.42 Mediocre 28% 4 3.83
Low 3.42 Average 33% 4 4.52
3.42 Excellent 38% 4 5.20
4.36 Mediocre 28% 4 4.89
High Medium 4.36 Average 33% 4 5.76
4.36 Excellent 38% 4 6.63
5.30 Mediocre 28% 4 5.94
High 5.30 Average 33% 4 7.00
5.30 Excellent 38% 4 8.06
 $70.00
Retail Sales Value
($ MM)
$60.00 Montreaux Sales
Volume ($ MM)
Acceptable
$50.00 Hurdle Rate
Sales in $ MM

$40.00
 Band range
$30.00 of ACV,
Quality and
$20.00 Awareness

$10.00

$-
10.46

10.12
11.24
13.36
5.98
7.10
7.09
7.87
9.35
6.54
7.86
9.35

7.26
8.63

Number of Purchases in MM
 Aggressive
Corporate 2015
2012 Market 2015 Estimate
2015

goals overly Chocolate
Market Size
$ $ $

aggressive
17.664 19.120 19.120
(BN)

› Despite double Annual

Growth Rate
2% 4%

annual market
adoption rate Average
Montreaux
$ $ $
39.02 42.24 45.65
Accomplished
Sales (MM)

national rollout Market Share 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
› Focus on supermarkets
“Introducing Euphoria
 Product specifications Pomegranate by
› Euphoria by Healthy Cravings Healthy Cravings –
Reward yourself with
› Pouch happiness and good
› 70% Premium Cocoa health”
 American credibility
› Sub-brand of Apollo
 Opportunities  Risks
› Partnering with other › Introduction of
firm than the Big Two superior rival product
› Develop better › Product not well-
infrastructure tested
 Perhaps more factories › Manufacturing
and manufacturing capabilities not up to
centers
par
› Product specifically › Ability to Scale
targeted to men
› Virtual integration with
Suppliers
 Mexico
  Bargaining Power of Buyers  Threat of New Entrants
› Low to moderate Bargaining › Low
› Large volume orders Power of › Very expensive manufacturing
› Lack of threat of backward Buyers costs
integration › Lack of distribution channels
› Reliance on industry product › Regulatory restrictions
› Confectionery and chocolate
market relatively saturated
 Threat of
Substitutes
› High
Competitive Threat of
› Alternate Threat of Rivalry Within New
confectionery Substitutes Industry
available Entrants
› Competition
during holidays

 Competitive  Bargaining Power of

Rivalry Within Suppliers
Industry Bargaining › Moderate to high
› High
› Equally capable
Power of › Supplier group is concentrated
competitors Suppliers › No threat of forward integration
› Slow growing
› Industry is important customer to
› High storage and
fixed costs supplier
› High exit barriers

Source: http://jmfrrell.blogspot.ca/2011/06/chapter-4-industry-analysisporters-five.html
 Go through Distribution Channels Breakdown
retail channels
› Supermarkets Supermarkets/Gr
and grocery ocery
focus
15.8% Convenience
 Premium Stores
chocolate 11.7% Drugs Stores
moving into this 54.7%
distribution 9.0%
Big-Box
channel 8.8% 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

Bar/Bag/Box (>3.5 oz)

Seasonal Chocolate
Seasonal Bar/Bag/Box(<3.5 oz)
Chocolate, Snack-size Chocolate
4.407