Godiva Europe

GODIVA EUROPE

Executive Summary

Problems

Godiva's advertising campaign is to create a common advertising message targeted at the three main markets, (Godiva USA, Godiva Europe, Godiva Japan) while taking into consideration the inevitable cultural differences amongst countries. The company must protect and promote its image of quality and luxury throughout the world. The company must also take a look at the current situation in its home market of Belgium and repair its "grandmotherly" image. In Belgium boutiques need to be reconstructed to the level of other Godiva boutiques from around the world. Christmas season, the company's period of greatest sales, is approaching with no set advertising campaign. Meeting Campbell's required rate of return of 15% when spending an additional 13M bf on advertising.

Problem Solutions

Short-Term

Godiva is going to launch a blitz ad campaign in time for the Christmas season. The goals of the campaign will be to stimulate demand for Godiva, focus on Belgium's unique customer preferences and reposition the Godiva brand in the minds of the youth. Our "grandmotherly" image in this segment must be addressed. Our communication mix will consist of direct mail, TV, and print media. Direct mail is attractive due to the low cost and ability to target selected demographics. The direct mail ads will have free sample coupons to encourage people to visit Godiva's newly renovated boutiques, thereby increasing frequency of purchase. The TV ads will focus on reinforcing our brand name recognition. In addition, traditional print advertisements will be utilized to reach Godiva's target market. The campaign will focus more risquй Lady Godiva advertisements towards the younger audience, through their TV shows and magazines of choice.

Long-Term

The long-term plan for Godiva is to create unique advertising campaigns for the European, USA, and Japanese market. The advertising will still communicate a common message but will be tailored to each geographic area. To enhance its image in Belgium Godiva needs to focus on continuous improve of its Boutiques. The Boutiques represent Godiva and need to be standardized to have the same look throughout the world. Godiva should also look into exploring new products and market areas to generate more sales. Introducing a Godiva candy bar will allow Godiva to reach a new demographic and a new market it has not penetrated. This would increase the personal consumption sales and frequency of sales.

GODIVA EUROPE

The World Chocolate Market:

Chocolate comes in many different shapes and forms. The official journal of the European community divides chocolate into the following four different categories: filled chocolate bars, chocolate bars that are not filled, more intricate chocolate candies (called "pralines" in Belgium) such as Godiva's chocolates, and other chocolate preparations. Chocolate pralines are either decorated or produced entirely by hand. These fine chocolates are known for their rich, distinctive flavor, smooth consistency, purity, and luxurious packaging.

The purchase of chocolate pralines is much more planned and deliberate than purchases of chocolate bars. In addition, they are typically purchased as gifts for others instead of personal consumption. Within the praline category a distinction has been made between industrial and name brand chocolate pralines. Industrial pralines are wrapped in generic boxes that do not emphasize any particular brand name. These are commonly sold through large retail chains during the holiday seasons. On the other hand, brand boxes are wrapped in intricate, luxurious packaging, offer a higher quality assortment of chocolates, and emphasize the brand name throughout the packaging and advertising.

Chocolate consumption stabilized in the mid 1980s as a result of increasing raw material costs. In 1989, the worldwide consumption of confectionery chocolate reached a level of just over 3 million tons (see exhibit 1) or an increase of 30.7 percent compared with 1980 consumption. Over this same time frame, extraordinary growth in consumption levels was evident in Japan (54.2%), Italy (102.1%), Australia (45.1%), and the United States. In Europe sales of industrial chocolates have plateaued (see exhibit 2) as indicated by the low growth, while sales of brand boxes are increasing. This suggests that the perceived image and quality of pralines are important to the consumer.

Growth rates of chocolate consumption vary a great deal within countries. Generally, consumption is higher in the northern region of Europe and lower in the Mediterranean areas. Per capita, Switzerland consumes the largest amount of chocolate (9.4 kilograms per person), and Italy the lowest (1.2 kilograms per person). Praline consumption with respect to total confectionery chocolate consumption is the largest in Belgium at 43.5%, followed by Great Britain, France, Italy, and Switzerland at 41.4%, 36.8%, 35.3%, and 33.9%, respectively (see exhibit 3). In absolute terms, Switzerland, Germany, Belgium and the United Kingdom, and are by far the top four consumers of pralines. With the exception of Great Britain, the growth of consumption in these four countries seems to have leveled off. The high level of consumption reached in these countries shows that there is still big potential for growth in the chocolate industry. The challenge is to provide the optimum marketing strategy to capitalize on this untapped potential.

Company Background:

Godiva has its roots in Belgium, where the handcrafting of chocolates stems from a long tradition. Joseph Draps founder of Godiva in the 1920s took control of the family business upon death of his father and created an assortment of prestigious chocolates for which he lacked a name. He finally chose the name "Godiva" because it had an international sound and historical charm that is associated with the legend of Lady Godiva.

Godiva was purchased in 1974 by the multinational Campbell Soup Company. Currently, Godiva is organized into three decision centers: Europe, USA, and Japan. Since Godiva Chocolatier, Inc. is a wholly owned subsidiary, its does not publish a separate financial statement, and does not discuss total sales, advertising costs or financial performance.

Since its introduction