Based on the forecast model for the healthy dark chocolate product with fruit tested in the BASES II test in August 2012, what is your prediction for the demand of the chocolate product? According to Table-I (attached below), it has been determined that a low customer awareness combined with low ACV and a mediocre product yields a Montreaux sales volume of 17.
At a medium level of customer awareness with a medium ACV and an average product, the sales volume is 25.11 M. Increasing the customer awareness to a high level with a high ACV and an excellent product results in a sales volume of 39 M. Therefore, an excessively optimistic forecast would be 39M while a cautious forecast would be 17.
44 M.- Given Apollo’s status as a global giant in the foods industry and one of the largest players in the confectionary market, it is safe to assume that it has the ability to generate significant customer awareness. The text also mentions that Apollo has a strong understanding of its customers. By implementing effective marketing campaigns and offering initial promotional launch deals, Apollo can achieve a high level of customer awareness. Additionally, Apollo plans to leverage its expansive sales force and existing partnerships with channel partners to market the product. This strategy will likely lead to a strong presence in retailers, distributors of groceries, drug stores, and supermarkets through traditional channels, thus establishing a high level of All Commodity Volume (ACV).
According to attribute ratings, 87% of customers agree that the $4.49 5oz. pouch of chocolate is healthier than other options, while 85% believe it is of high quality and 84% think it tastes great. Taking into account the high customer awareness and distribution (ACV), it can be concluded that the product meets the acceptable hurdle rate of $30 M, regardless of whether it is considered mediocre, average, or excellent.
Considering the high customer awareness and high ACV distribution, along with an average product, a demand of 36M can be forecasted.
What is your recommendation to Andrea Torres – further product testing; test market the product in selected test markets; plan a regional rollout or launch nationally?
- a) Further Product Testing – Not recommended due to:
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Further product testing will require a long time of 1 year to obtain results and will setback the product launch by another 3 years. This long time gap will not only delay the launch of the product but also allow the competitors to sniff the impending launch of Montreaux in US markets and thereby give them a chance to react accordingly, perhaps even launch a product – dark chocolate with fruit – on similar lines.
Competitors might launch a new product to target Apollo’s target segment. It is also mentioned that there was news that a competitor is not far behind in launching a dark chocolate with fruit.
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Apollo is advised to release the product in early 2013, without conducting any additional product testing.
- b) Test market the product in selected test markets – Not recommended due to:
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Launching the product in select test markets would entail launching the product in 2 or 4 different cities that represent national tastes.
Since, no such cities are available that are representative of the national sample, launching the product in select test markets would not serve Apollo’s purpose.
- Given that the test product would be produced in small test quantities, Apollo’s sales force would have to convince its retailers to stock small quantities of the product on their shelves. Despite having a strong retailer network, Apollo could face some possible fall-outs:
- In a business scenario, the retailers will not have much incentive to stock or push small quantities. They would rather stock high selling, high volume or high margin products on their shelves.
- Small quantities might not reach all customers or the target customers at all. The quantities might get picked off the shelves by non-target buyers and don’t reach the intended recipients.
- The small quantity of product can also be picked up by the competitors and they will get a chance to test it and react to market conditions suitably.
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This test would be expensive, costing $ 3M and would require a long time of 1 year to get viable results.
This in turn would delay the launch of the product by as much as 3 years.
- c) Plan a regional rollout or launch nationally – Recommended to launch nationally due to:
- As Apollo is vying for a larger pie of the US chocolate market, a national launch of Montreaux chocolate will give Apollo the right opportunity to make an impact. Apollo should launch the product nationally to gain first mover advantage in the dark chocolate-with-fruit category and capture the target market segment through early launch. This will help Apollo have a far-reaching effect and ensure greater market penetration.
- Reaching a wider customer base, on a national scale, will also provide a greater feedback and help Apollo improvise the product to suit tastes and requirements accordingly.
- As no one particular city is representative of the US market conditions, so also it is recommended to launch nationally as a regional launch would mask accurate findings; different regions which may have different customer expectations. A national launch will help Apollo gauge customer sentiments, preferences and expectations better.
