S. No.

Name Roll No.

Role

1 Rajat Khullar 63 Group Leader & Member

2 Nitin Nangia 52 Member

3 Rashu Bhalla 66 Member

4 Nitin Mathur 51 Member

5 Neeraj Shukla 48 Member

INDIAN INSTITUTE OF FOREIGN TRADE (IIFT)

Presented By: Group 8Section BMBA (IB) | 2010 – 13

GODIVA EUROPE

HISTORY / BACKGROUND• Godiva was founded in 1920 and was into the business of making

prestigious delicate flavored chocolates.• It was purchased by multinational Campbell Soup Company in 1974

under which it had 3 decision centers.

- Europe- Japan- USA

• It has its headquarter in Brussels, Belgium where in the Company Factory has an annual production capacity of 3000 tons catering to needs of more than 20 countries.

• Godiva Europe has an annual sales of 926 million. Belgium Francs and has its presence in countries like Francs, Great Britain, Germany, Spain Portugal.

• Amongst all Japan is an important market for Godiva because of price of 4000 Bf/ Kg compared to 2000 Bf elsewhere.

• Main reference market for Godiva international consists of Triad Nations.

WORLD CHOCOLATE MARKET • Chocolate has been divided into 4 categories• Bars of chocolate that are filled • Bars of chocolate not filled• Chocolate candies or chocolates (called “pralines” in

Belgium) such as Godiva’s chocolates• Other chocolate preparations.

Two varities of Chocolates produced as per packing

1)Industrial Chocolates which are sold in pre-wrapped generic boxes without brand names.

2)Chocolate pralines which are handmade chocolates with delicate flavour and are packed in branded boxes (luxurious packing).

GODIVA CHOCOLATES IN WORLD

Country Categorization & Usage

Preference Pralines, Bars

Selling Medium Used

Belgium Gifts & Self Consumption

Assorted High end stores & Boutiques

Germany Not very fond of Chocolates

Classic, Chocolate Bars & Pralines

Franchised dealer

France Gifts on special occasion

Drier, bitter chocolates Boutiques

Holland & Italy

Not very fond of Chocolates

Pralines not preferred -

United Kingdom

Not a luxury product Assortment of confectionery products

Upscale retailers (Marks

& Spencer)

Spain & Portugal

Luxury product, gift Pralines Upscale Stores, Franchisees

USA Birthdays, Valentine Days & Christmas

All types Upscale Stores in Shopping Malls

Japan Gifts on Occasion All types -

Duty free For all kinds of usage

All types Duty free shops

CHOCOLATE CONFECTIONERY CONSUMPTION PER COUNTRY

Country

Per Capita Consumption in Kilograms in 1989 Share of

Chocolates in Confectionery

Chocolate Chocolate Candies

Chocolate Confectionery

Belgium 2.65 6.09 43.5%

Denmark 1.17 5.61 20.9%

France 1.69 4.59 36.8%

Spain 0.14 1.21 11.6%

Italy 0.65 1.84 35.3%

Japan 0.44 1.59 27.8%

German Federal Republic

1.64 6.81 24.1%

Switzerland 3.17 9.41 33.9%

United Kingdom 2.96 7.15 41.4%

United States 1.14 4.77 23.9%

EVOLUTION OF CHOCOLATE CONFECTIONERY CONSUMPTION: AVERAGE YEARLY GROWTH RATES, 1980 – 1989

Country

Consumption

(Kilograms per Person)Average Growth

1980 1989 1980 - 100Average

Growth Rate

Belgium 6.04 6.09 100.8 1.76%

Denmark 4.80 5.61 116.9 1.79%

France 3.96 4.59 115.9 1.65%

Spain Nd 1.21 Nd -

Italy 0.92 1.84 200.0 8.00%

Japan 1.09 1.59 145.9 4.28%

German Federal Republic 6.56 6.81 103.8 0.42%

Switzerland 8.44 9.41 111.5 1.22%

United Kingdom 5.48 7.15 130.5 3.00%

United States 3.69 4.77 129.3 2.89%

MARKETING STRATEGIES

• As has been seen with the country wide distribution and target markets, Godiva has spread its wings in major parts of Europe

• Main objective pursued by Godiva was to cover as much European market as they could and to improve upon the sales of Godiva pralines and bring a balance to the profitability in increasing share of the handmade chocolates

• They took Belgium consumer as a reference point which were considered to be fine Connoisseur of chocolates and tested all new flavours on them. If it succeeded with them, then obviously its success was assured through out the world.

PACKAGING STRATEGY

• Packaging is one thing that distinguishes one country from another in order to meet the chocolate consumption habits, for example in Japan chocolates are purchased in small quantities (price factor), wherein beauty of packaging becomes pre-dominant whereas the case is totally different in US.

• Keeping this thing in mind packaging in Godiva is by themes called “collections”, wherein beautiful handcrafted fabric boxes were used illustrating different occasions like Valentine Day, Easter, Mother’s Day, Christmas .

• These boxes were priced on a higher side hence were used for in house storage rather than for sales.

WHY GODIVA COULD NOT PENETRATE IN BELGIUM

• High Labor Cost

• High margins on Rate of Return of Capital

• No Standardization in Rate, boutiques/stores

• Variation in Price regime resulting in loss of volumes

• Poor distribution network

• Competitors selling at low price like LEONIDAS.

Retail Price Comparison among BrandsBelgium France United Kingdom

Brands

(bf/kg)Price

Brands

(ff/kg)Price

Brands

(£/kg)Price

Godiva 1080 Godiva 320 Godiva 13.50

Neuhaus 980 Hediard 640Gerard Ronay

20.00

Corne PR 880 Fauchon 430 Valrhona 16.80

Corne TO 870 Maison ch. 390Charbon

el14.00

Daskalides

680 Le Notre 345 Neuhaus 12.00

Jeff de Bruges

595Fountaine

ch.327 Leonidas 6.75

Leonidas 360 Leonidas 120 Thorton’s 5.80

Measures Taken

The design of boutiques have been revamped

The distribution strategy has been redesigned adding various networks

Changes in packaging making it attractive and eye catching

The Godiva Distribution Netowork

CountryCompany-

Owned StoresFranchised

DealersDepartment Stores

& OthersTotal

outlets

Belgium 3 54 - 57

France 1 19 - 20

Spain - 6 18 24

United Kingdom

2 - 15 17

Italy - 2 - 2

Holland - 2 - 2

Germany - 4 1 5

Portugal - 3 7 10

Total Europe 6 90 41 137

United States 95 - 800 895

Japan - 22 67 89

PRICE COMPARISION OF GODIVA PRALINES IN THE WORLD

Price of One Kilo of Godiva Pralines (bf)

CountryPrice to

FranchiseesRetail Price

(VAT Included)VAT (%)

Belgium 640 1080 6.0

France 763 1920 18.6

Spain 640 2145 6.0

United Kingdom 757 1782 17.5

Italy 640 2009 9.0

Holland 640 1261 6.0

Germany 640 1641 7.0

Portugal 640 2408 16.0

United States Na 2040 -

Japan Na 4000 -

Advertising Strategy

Strategy for Advertising Current Positioning

Consumer Benefit

Promise

Psychographic Characteristics

Competitive Frame

Target Audience

Advertising Objective

Message

Tone & Manner

BUSINESS MANAGERS PERSPECTIVE

• As Business Manager, this case gives us an in sight two brainstorm on strategies applicable for expansion and entry in foreign markets, but also on how to tap the domestic market.

• Keeping in mind the facts given in case it can be well understood that the Godiva being a high-end brand with specialization in hand-crafted chocolates faced a price crunch in Belgium which led to bottlenecks in growth.

• It becomes imperative that while expansion is on, one takes into account not only the PESTEL dynamics of environment but also understand to use the resources available in hand for penetration in market.