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Godiva's History and Background
Godiva is an established brand of chocolate that has been perfected to its highest capability and is considered to be part of a prestigious, upper class chocolate praline. The name Godiva was actually given in honor of the Legend Lady Godiva.
For generations, Belgium has tried to maintain an image of perfectionist throughout their unique society. It's no wonder how the company Godiva originated in Belgium from a man named Joseph Draps who owned and controlled the company from 10 up until 174 when Campbell Soup Company purchased Godiva International. It was then broken into three divisions, Godiva Europe, Godiva U.S.A, and Godiva Japan. All three divisions are equally valuable to the growth of Godiva.
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In 11 Godiva annual sales consisted of 6 million francs and still had a reported net loss of 10million francs. Within one year the new President of Godiva, Charles van der Veken took this mature unprofitable company and redesigned the exact way the company would operate. What Godiva did was, they raised all the standards of operations so that they became equivalent in comparison to the market styles of the U.S. and even Japan. Then the retail network distribution was down- sized to company owned stores and 54 franchises. To provide the consistent image of "most expensive", "nicest packaging", and "most beautiful stores", the company formed precise organizational rules for the remaining retailers of Godiva.
The second action Godiva took was replacing all the original sales staff and even the marketing team. These precise rules helped Godiva regain the original brand equity of the product while creating a uniform that presents Godiva's core competency of a high quality delicate tasting product in a luxurious packaging throughout the remaining stores. With the upgrade of standards Godiva immediately helped strengthened it's marketing strategy while still creating a future possibility of expansion into unexplored countries where the consumption of chocolate is increasing.
The Main Issues
Since Godiva was one of the first to originate in Belgium it should defiantly have a large grasp on the current market, but unfortunately it doesn't. In 11 Godiva only grasped 10% while their major Competitor Leonidas grasped 4% in a market that was estimated to be .6 billion francs at the time. When considering the population of Belgium, it is about times smaller than France, so actually 10% isn't necessarily bad, and it is descent. Looking at the competition, Godiva obviously wasn't living up to their potential in distinguishing their core competency, which resulted in a decline in their brand recognition. That was exactly why they reestablished their network chain to maintain the original idea of a luxury chocolate.
Problem #1
One area Godiva needs to re-evaluate is their retail distribution across countries. There are 5 company owned stores in the U.S. along with 800 department stores. Japan possessed franchised dealers and 67 department stores. In Europe alone, there are only 6 company owned stores with 0 franchises along with 41 department stores. The major problem is the disparity between the Godiva Boutiques globally as well as the Belgium boutiques.
Godiva needs to take into consideration the image that the retailer boutiques are presenting to the customer everywhere. They need to formulate a standard of functional themes throughout these boutiques globally. Functional themes meaning, that for every season change and holiday every single Godiva store carries out a uniform display. This change in the boutique scenery is very important seeing how Godiva isn't only for personal consumption, but for gift giving as well. About .1% of Godiva's purchases are for gifts and about 4.4% is for personal consumption. Because Godiva has a great luxurious appeal to both types of markets, it is very important for them to maintain high quality of standards for the presentation of the products in boutiques.
Problem #
It was now time for Godiva "to communicate the desired image of Godiva more widely, now that we have a retail network capable of maintaining that image on the level of the Triad Countries." (Pg. 86) Yes, Godiva already has brand recognition globally, but they wanted to take this brand recognition into one "common" perspective. Godiva's particular advertising sends an appeal to non-conservatism middle-upper class consumers. What Godiva needs to do is capture the remaining market with an appeal of affordable luxury despite cultural differences. If Godiva wants to send a global common message, they will need to take this segmented market; A- chocolate pralines for the rich and elite, B- chocolate candies for the average self-indulgent consumer, and view each as a combined market.
Analysis of Options
Godiva currently has a competitive advantage globally because of its buy-out from Campbell Soup. When Campbell bought Godiva it provided a golden opportunity that none of the other competitions had available. This buy-out was beneficial to Godiva because it gave them the upper hand in being the first to expand globally. But before they could expand globally they needed to see what exactly was going on with the company internally.
Analysis of Problem #1
After a good review, it was obvious that the product strategy was suffering. Even though Godiva had the competitive advantage, it seemed as though it did not know how to imply it throughout Belgium. When in comparison to the U.S. and Japan, the product strategy is quite different because it is viewed as fairly "new". The evolution of Godiva began in the Belgium market, so consumers have watched the growth of the product along with its competition. With the long-term presence of Godiva in Belgium, it was going to be difficult to impress the Godiva image in Belgium any further.
The first part of the actual plan to help improve Godiva would be to create a new product strategy that resembles the American way, and will still be able to eventually be applied globally. The repositioning of the product strategy should be founded upon a trail basis in the Belgian market because of the heritage and familiarity of Godiva. The Belgium market seems to be suffering the most, with a small possession of 10% in market shares. It almost seems as though the plan can only become beneficial experiment for Godiva. Using the Belgium market as the trial period could help place Godiva back into the position amongst the competition, number one!
The channel distribution is going to be a key factor in reducing the differential qualities in the boutiques. Godiva needs to create a unique boutique design that is uniform to all Godiva franchises, department stores, and even company owned stores. The image of each store should portray similar qualities such as the store displays, floor layout, and even the employee presentation of customer service. By setting the standards high, it should reinstate Godiva's brand equity while justifying the price of the product through the total quality of the product.
Analysis of Problem #
Godiva presently has a total budget of 1 million Belgian francs per year. The 1 million helps provide funds for Godiva to sponsor events such as golf tournaments. With an additional 1 million bf Godiva would be able to pursue a global advertising campaign. If Godiva wants to send a common message of their image globally through advertising, with an American twist, they will need to consider a variety of factors that will affect their promotional mix.
One of the most important factors is the demographics of areas they plan on demonstrating the global campaign in. The first social factor would be the consumption of chocolate per country. Using the media can have an even larger impact on the increase in consumption. With an increase in the consumption of chocolate can only lead to an increase in sales. In a nine year period there was abundance in consumption of chocolate in Japan-54%, Italy 10%, Autralia-45% and even in America. Countries like Spain and
Portugal also accepted the idea of luxury and wealth, which are more susceptible to the idea of a rich luxury chocolate because it is still a new concept. The stable economy in these countries is another part of the reasons for acceptance. The U.S. and Japan are also good potential growth markets because both countries the idea of chocolates for a special occasion gift is popular. Countries like Switzerland, UK, and Germany are defiantly not the safest way to expand the global campaign. These countries are not idealistic because, the Switzerland chocolate market has plateau, the UK consumers are conservatives, and Germans do not recognize the pampering culture of chocolate.
A general focus should remain on the three main markets that exist in Belgium, U.S, and Japan for a couple of different reasons. The Belgium market deserves good portion of attention because the lost image of Godiva needs to be restored. Belgium is also the main center of operation for Godiva and even produces specialty products that other factories do not provide. The U.S. is another good target because it posses a large portion of company owned stores, and department stores. The U.S. also has a factory in Pennsylvania that produces 0% of the countries needs while the other 10% is imported from the main Belgium factory. The Japan market is key because it is at its prime for expansion. A majority of sales in Japan are seasonal but the fact that the price level is the highest in Japan it makes up for lost yearly sales. Japan actually pays Godiva the highest price for one kilogram of chocolate 4000 bf. The U.S. price level is set at 000bf and the Belgium price level is even lower, 1000bf.
Recommendations and Outcomes
After reviewing both problems and the courses of actions that will need to be implemented in order to solve these problems, it doesn't seem too far-fetched to implement both plans of action. If problem one is acted upon, it will send a reminder to the target customer about Godiva's image that has become uniformed through the upgraded boutiques. Grasping the potential customers attention is key because they need to be aware of what Godiva is actually offering in these boutiques. With the formality present in each and every Godiva boutique, it should have a positive impact on the customer leading to an increase in sales without affecting any costs.
Now on the other hand, implementing the second plan of action globally, will be a costly procedure somewhat. Godiva does need to seriously consider implementing the second plan of action as well as the first plan of action. The first plan is key to the success of the second plan, because without a trial market the success rate isn't proven and neither is the direction of the global campaign.
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