1. Purpose and Objective
Godiva Europe, the leading member of the Godiva triad, is a premium producer and supplier of chocolates. Our company has its main factory and headquarters at Belgium from where it supplies chocolates to countries in Western Europe, Japan, and meets part of the requirements of the USA. These three regions make up the triad of Godiva, which in turn is owned and controlled by the US based Campbell Soups Limited. Godiva Europe, which was in severe financial difficulties in 1990, has seen a change in senior management with the entry of a new President, Charles van der Veken, and significant change in its sales and marketing functions. The last year has seen the exit of a number of sales and marketing employees, redesigning and refurbishment of sales outlets and boutiques, and changes in rules and procedures. While these measures have yielded results and we have recorded reasonable profits in 1991, the President feels that it is now time to initiate further changes in marketing strategy for Godiva Europe, with special reference to advertising, image, pricing and other components of the marketing mix, to further sales, penetrate new markets, consolidate image and further profits..
This report aims to analyse the working and features of Godiva Europe, the broad working of the chocolate industry, and the likely challenges facing us in the wake of impending European unification, followed by appropriate recommendations. The report is structured into successive sections that deal with an analysis of the past and current events pertaining to Godiva Europe, a detailed SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the organization, followed by appropriate recommendations (which are based on the SWOT analyses) to propel the company forward to meet its marketing objectives. Relevant assumptions made for this report are provided separately.
2. Analysis of Our Past and Present Conditions
Godiva Europe, started in 1921, in Belgium has during the course of the century become one of the better known chocolate manufacturers in Europe, Apart from Belgium we have significant markets in Great Britain, Germany, France, Spain, and Portugal. The company’s headquarters at Brussels control the Europe operations and report to the concerned Vice President at Campbell Soups, Godiva’s production facilities, which have a production capacity of 3000 tons per annum are also located at Brussels, 65 % of the production being sold by Godiva in Europe and the balance to other companies as well as to Godiva Japan and Godiva USA under a transfer price arrangement. We have built up excellent production expertise and know-how and distribute our products through owned shops, distributor boutiques, and airport duty free shops. The company has two main product lines, industrial chocolates and pralines and four manufacturing processes that churn out different types of products. Godiva acquired Corne Toison d’Or, in 1989, a brand that accounted for 10% of its 1991 sales of 936 million Belgian Francs. Godiva Europe, despite its takeover by Campbell Soups, had developed a number of problems, mostly related to its sales and marketing strategy. The company had built up accumulated losses of 10 million francs in 1990, a situation that has subsequently improved, with operating profits for 1991 being in the region of 13 million francs. While we face competition from other chocolate manufacturers, as well as competing products, Godiva is in a position to take advantage of a number of opportunities The subsequent sections of this report detail the internal Strengths, and Weaknesses, as well as the external Opportunities and Threats (SWOT) of the company.
3. External Opportunities which we could exploit
· The company has strong market presence in Spain and Portugal, countries that have much lower per capita chocolate consumption than its other markets and where expected future increase in chocolate consumption will open new markets
· The establishment of the EU should make it easier to access markets in other European countries. Countries like Italy, which like Spain and Portugal, have low per capita chocolate consumption should yield attractive new markets.
· The company’s target group, at present, does not include children, a potentially huge market for appropriate chocolate products that could increase sales considerably.
· The current product range is expensively priced. A completely new market segment (that of lower priced chocolates) could provide extensive opportunities to for market penetration and increased sales.
4. External Threats that could impede success
· Competitors with lower prices could eat into market share
· The emergence of new products that people could buy, for nice and appealing gifts, or for personal consumption could reduce the anticipated growth of the chocolate industry.
· New companies from other West European countries, including food giants like Unilever and Nestle could decide to enter the premium chocolate segment and eat up market share
· The establishment of the EU could lead to rationalization of prices and put pressure on margins
5. Internal Strengths on which to capitalize
· Excellent product and technical know-how
· Established brand name with good recall
· Image of quality and excellence
· Brand associated with tradition, sophistication, sensuousness and affluent lifestyle
· Strong distribution structure
· Multi country presence
6. Internal Weaknesses to overcome
· Image of being old fashioned and dowdy
· High cost of production because of preponderance of praline production and low automation.
· No presence in low cost or children’s segment
7. Assumptions on which strategies are based
It is assumed that the European Union will be established, in 1993, and introduce a new set of opportunities and challenges for our company. Furthermore, it is assumed that while markets will continue to grow at the current rate, new competitors with more advanced technology, automated plants and marketing know-how will continue to enter the market.
8. Marketing Strategies that emerge from the SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis.
Marketing strategies for Godiva need to focus on entering segments as well as areas in which it is underrepresented. We should formulate strategies for entering the children’s confectionery market, the market for low priced chocolate, and countries like Italy, which have high per capita incomes but low per capita consumptions, enabling the company to enter in the ground floor.
Our marketing efforts should, like wise, be more intensive in countries like Spain and Portugal, where consumption is expected to increase faster than others. Efforts also need to be made to study costs intensively, increase the amount of automation and extend the company’s product line (a) to include confectioneries for children, and (b) bring in newer varieties of industrial chocolates for the mass market. Distribution strategies will also have to be modified to sell these products not through boutiques but through supermarkets and other high street outlets. The marketing mix for new products will have to cater for defining the product, fixing prices and discounts, formulating promotions and fixing distribution and placement channels.
9. Summary and Request for Action
Our company, with an established product base, excellent know-how, multi country presence, and widespread distribution structure is ideally poised to take advantage of the enormous opportunities it has to expand its markets, both in segments and in geographical areas, and leapfrog into a much bigger league. A request for further research and preliminary work into the recommended strategies, namely cost reduction, product range enlargement, entry into new segments and geographical areas should be kindly considered by the management.
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