Case #4 - Godiva Europe

Sarah Gardner, Heather Brown, Tran Truong, Joe Stephens

Executive Summary

Godiva is currently struggling to maintain a youthful and luxurious brand image within

the Belgian market. After considering three alternatives that Godiva could implement, we came

to the conclusion that alternative two served as the best option to regain lost volume from

competitors as well as solidify their desired brand image. This alternative will place a heavy

emphasis on the customization of praline gift boxes as well as the revamp of advertisements in

order to better align the brands perceived image with it’s desired image.

Problem definition

How can Godiva inspire a cohesive, “youthful luxury” brand image and create a

consistent marketing campaign for Belgium that will regain lost consumer volume and improve

the frequency of purchase, given their undesired increase in price and high production costs

while working within their advertising budget of $382,353 USD (13 million bf)?

Analysis of Alternatives

The first alternative that Godiva may approach to address the business problem is

to maintain the status quo of the company. Simply put, this would mean that Godiva

would continue to utilize the current marketing strategy of building off of a

well-established brand name and tailor marketing messages according to the market

(Appendix A). The consumer has been able to follow the evolution of Godiva chocolate

and has been exposed to the brand for years after integrating into the Campbell's Soup

Company early on. The problem associated with this alternative is that the marketing tools

deployed in the Belgian market, as different from those of the US and Japan, are seen as

“old-fashioned” and “grandmother-like”. This old, tired image is not optimizing on the

desired luxurious and youthful image that renovations to the boutique stores are trying to

promote. As so, the gap between the “perceived image” and the “desired image” will

remain large and stagnant.

The second alternative Godiva should consider is to place a strong focus on

customized praline gift boxes. Godiva, within Belgium, is known for being a refined

chocolate that acts as the perfect gift for loved ones (Appendix C). Godiva already

dominates the market for gift box sales and should continue to use this strength to

differentiate themselves from their competition. Being that 60% of chocolate purchases are

offered as gifts, we believe that by emphasizing this opportunity, Godiva will be sure to

strengthen and attract more attention to their brand image. Godiva’s main competitor in

Belgium, Leeonidas, is known for its mass production and its products are primarily

purchased for self consumption. However, Godiva is seen as a more thought out, luxurious

purchase as the pralines are hand crafted and decorated. With the Belgian chocolate market

already being so saturated, it is important for Godiva to differentiate itself. Focusing on

hand-crafted luxury as the driver of this alternative, this will cement the brand image of

turning to Godiva as a luxurious gift. Belgians within the market also associate the ideas of

refinement, taste, and gifting as some of their highest priorities (Appendix C). While this

alternative may not contribute much to Godiva’s growth in personal consumption, we

believe it is more important to play into Godiva’s strength of being the Queen of

Chocolate as they already succeed as a great gift giving chocolate.

The third alternative that Godiva could pursue is to add a product line extension

and introduce a new form of chocolate targeting price sensitive consumers. When

analyzing retail price comparisons among brands in Belgium (Appendix D), there seems to

be a large price gap between competitors. With Godiva being one of the highest priced

chocolates in Belgium, Godiva could undercut its competitors’ prices and introduce a

chocolate that is appealing in affordability. When selling Godiva chocolate in Belgium,

Charles van der Veken noted that a 10% price increase policy would be implemented

within the new franchisee contract. As the new line would attract and sell to price

sensitive consumers, the generated sales volume loss of 7% could begin to recover.

However, introducing this new middle-priced product might lead to altering the luxurious

image Godiva has already established. Introducing this new chocolate would increase the

risk of cannibalization, in which this new product would eat into the sales of Godiva’s

prestigious chocolates. Given that the growth rate of per capita chocolate consumption in

Belgium has plateaued, introducing a brand new product into a market that has already

matured is not Godiva’s best option (Appendix F).

After evaluating all three alternatives, we plan to utilize our budget and focus our

efforts on alternative two in order to improve Godiva within Belgium (Appendix E).

Plan Development/Implementation

With the number of duty free stores on the rise and Godiva’s sales being closely

linked to the increase in Belgium's passenger traffic, we want to focus on implementing

customization stations within Godiva’s duty free shop boutiques. Those who are arriving

and departing from the airport will now have the opportunity to take “luxury-on-the-go”

with them. Since many Belgians prefer having the freedom to select their sweets over

pre-wrapped chocolate, we will have stands that offer a variety of Godiva’s finest

chocolates that customers can select from. Since Godiva is already viewed as a gift giving

luxury, we plan to promote and implement these stations as a way for travelers to create a

hand-selected gift for their loved ones after their long journey.

To assist in moving Godiva’s image towards a more youthful image, we plan to

allocate money towards further renovating boutiques. Since customers have already been

responding positively to Godiva’s efforts of slowly renovating boutiques, we would also

like to invest in extending a few Godiva shops to include tea rooms (Appendix I) as they

are currently trending in Belgium. These tea rooms will serve as a stress free zone for

those looking to relax or buy some chocolates on the go. These rooms will also reinforce

Godiva’s luxurious image as consumers may view these tea rooms as multi-purpose. For

instance, not only will they provide stress relief to customers but they can also serve as a

romantic date location for couples looking to gift one another with Godiva’s luxurious

sweets. Tea rooms can also capitalize on Godiva’s image of being seen as more of an

experience by getting customers involved through customization, rather than buying a

plain chocolate bar. During the major calendar holidays, within these new boutiques and

tea room additions, we will be introducing a new featured experience of “customizable

collections.” Each holiday, like Christmas (Appendix J), consumers will be able to

customize their own holiday assortment of chocolates to act as the perfect gift to a loved

one. The beautiful and pristine design of the boxes will further affirm that Godiva is the

brand for couture. The current collections offered in the Godiva stores are seen by the

Belgian consumer as unreasonably high for the assorted chocolates inside. By providing

the opportunity for the consumer to customize their own contents, they will be able to

create value for the price.

While focusing on boosting our duty free boutiques and tea rooms, we also plan to

revamp advertisements in order to promote Godiva as a youthful, luxurious brand and

move away from the current Belgian perception of an aged, grandmother's image. We plan

to implement this change by filling print advertisements with an elegant but youthful color

scheme and imagery (Appendix B). The goal of these print and banner advertisements will

be to highlight the new elegant boutiques and chocolate designs while also emphasizing

Godiva’s unique ability to customize boxes of hand-crafted pralines depending on

consumers’ personal taste. In terms of where Godiva will be promoted, we plan on

allocating money toward print ads in malls, billboards, and airport medians along with

radio ads.

We plan to use the current advertising budget of 13 million bf ($382,353 USD) to

fund and execute our implementation plan. Given this budget, Godiva will need to sell an

additional 12,038 units in the following year in order to break-even for these additional

expenses (Appendix G). In terms of market share, Godiva will need to increase its market

share by 0.4% raising it from 10.3% to 10.7% (Appendix H).

Appendix:

A.

B.

C.

D.

E.

F.

G.

H.

I.

J.

K.