Question

Question:

CASE STUDY 2: CALEDONIA PLAIN CHOCOLATE

Introduction

In late 1997 the marketing audit conducted by Booker-Greer Limited's confectionary division highlighted a number of weaknesses in their marketing position. The two main weaknesses were:

1.    Their strength in milk chocolate lines was matched by poor performance in plain chocolate. This situation was made more serious because of the growing importance of plain chocolate in the market.

2.    In a number of parts in the UK their market share was significantly worse than in the country as a whole. Among these Scotland stood out as particularly important because of its high per capita chocolate consumption and the unusually high sales of plain chocolate in that area.

Competitive history

Both these factors could be explained in part by a series of decisions made in the past. In the early 1950s the company had been the first major confectionary manufacturer to spot the trend away from toffees and boiled sweets.

For over thirty years the firm had sustained it position as one of the three largest confectionery manufacturers through a small number of major milk chocolate count lines backed by heavy advertising an extensive distribution. These traditional favorites had been supplemented by a number of new product launches. During the late 1980s and early 1990s a very high rate of new brand introduction by themselves and their competitors had occurred. Overall, Booker-Greer had come out of this period worse off than before. Unlike their competitors they had not established a major large-volume count line on the market. (Although the two competitors had established only one new major product each, the long-term contribution of these was likely to be substantiated.)

The current situation

Faced with the ever-escalating cost of introducing a new brand, the new product group embarked on a wide-ranging study of alternative strategies. In the light of the weaknesses in plain chocolate and in Scotland, it was recommended that the firm explore the scope for a brand geared to the specific needs of the Scottish market. It was hoped that this brand would take up some of the spare capacity then existing in the firm's manufacturing plant in Edinburgh. The large vote in favor of Scottish devolution, also, seemed to suggest that a distinct opportunity existed for a Scottish brand.

In the past the firm has always worked very closely with its existing advertising agencies on new product development projects. In this case it was decided that extra insight into the market in Scotland could be achieved through a local Scottish agency. Four Scottish agencies, two based in Glasgow and two in Edinburgh, were asked to compete for the business, as was the Edinburgh office of one of their London agencies.

On the competing agencies Alexander Gooch and Co. stood out as most committed to a distinctly Scottish offering. They were briefed to develop and research a new brand for possible launch in late 1998 or early 1999. Clear volume targets were set, amounting to 25 per cent of plain chocolate count lines (10 per cent total count line sales) in Scotland. This would minimize the impact on current sales of Booker-Greer products while biting into their competitors' market.

A number of names, packs and related advertising themes emerged, notable 'Stuart', 'Saltire', 'Caledonia' and 'Stirling' brand chocolates. These were researched in conjunction with a brand name and proposition, ' Silhouette', that had performed reasonably well in national research studies among both adults and children.

The research indicated considerable interest in the concept of a Scottish brand. The Caledonia brand and campaign (emphasizing Scottish links, made in Scotland etc.) did consistently well, out-performing all other propositions, including Silhouette. Unfortunately, two major problems emerged:

1.    Consumer preferences were for a milk chocolate Scottish brand.

2.    The results, although promising, suggested a market of less than 18 per cent of the plain chocolate market (for the plain brand) and 9 per cent of total chocolate count sales (if a milk chocolate brand was launched).

The results created a major debate within the firm about further actions. The brand group and advertising agency favoured progressing with the launch, initially with the plain brand but with a view to introducing a milk brand later. Both pointed to the overall appeal of the basic concept and suggested that the results might easily be an understatement, given the newness of the proposition. They also pointed to strong nationalistic feeling in Scotland, and the brand manager in charge saw increased pressure of greater economic, social and cultural autonomy as a possible platform for long-term strength.

The firm's research department recommended abandonment. In this they were supported by the corporate planning department, who pointed out the harshly reality the offering had failed to meet its targets at a time when national sentiment was high. Also, any milk chocolate derivative would draw much of its sales from their current offering.

After considering these arguments the marketing director decided to abandon this initiative.

Tasks

1.    Examine the thinking which led to this project.

2.    Review its development.

3.    Explore the final argument.

4.    Evaluate the final decision.

Answer 1

1.

Thinking which led to this project-

The marketing audit conducted by the company in the late 1997 highlighted a number of weaknesses in the company’s product line. Their plain chocolate line was falling behind in sales as compared to milk chocolate. Also, they were not gaining market shares in the parts of country which had a high chocolate consumption rate, such as Scotland. The management tried to tackle both the weaknesses with a single solution – introduction of plain chocolates in Scotland. This thought process led to introducing a new brand in the Scotland for plain chocolates. They reviewed multiple agencies and chose Alexander Gooch and Co. as their marketing partner for this new venture.

2.   

The marketing audit conducted by the company in the late 1997 highlighted that the company’s plain chocolate line was falling behind in sales as compared to milk chocolate and they were not gaining market share in high chocolate consumption market of Scotland. The management tried to tackle both the problems with a single solution – introduction of plain chocolates in Scotland. The company reviewed multiple agencies and chose Alexander Gooch and Co. as their marketing partner for this new venture.

Unfortunately, in the process of solving the current problems with a common solution, the company failed to foresee the market suitability. In Scotland, the consumers preferred milk chocolates to plain chocolates. The brand group and advertising agency proposed introducing plain chocolate now with an expected ~18% market share and introducing a milk chocolate brand later. The idea was a Scotland centric brand proposition might be more favorably accepted than expected. However, the company’s market research dept. proposed to scrap the project. Their rational was- if the new chocolate proposition failed to capture the consumers and meet the targets when the sentiment was high, it was unlikely to be successful at other times. Also, if they introduced a milk chocolate later, it would drive the sales for plain chocolate even down.

3.

The final argument is from 2 sides. One side is the brand group and advertising agency, which propose to go ahead with the introduction of plain chocolates in Scotland, and introducing a milk chocolate brand later, on the brand value of plain chocolates. They expect to have higher sentimental value for nationalistic angle of the brand proposition. Also, they are fairly optimistic of the market growth of the plain chocolates.

The second view is from the company’s market research dept. It proposes to scrap the project. Their rational is- if the new chocolate proposition failed to capture the consumers and meet the targets when the sentiment was high, it was unlikely to be successful at other times. In addition, if they introduced a milk chocolate later, it would eat up the sales of plain chocolate later.

4.

The final decision was from the management, after evaluating the proposition of both sides. The marketing director decided to abandon the initiative of introducing a plain chocolate in Scotland. The market research did not provide a sufficient back up for going ahead with the project.