Montreaux Chocolate USA Report Essay Sample

Montreaux’s first year objective, one cannot conclude with certainty that the product will earn such high ratings in its first year of existence. Therefore, it would be wise for the company to pursue a less aggressive marketing strategy for the first year so that the company can assess and evaluate the product’s overall performance to determine optimal production levels for the new product line. Alternatives:

The case discusses four major alternatives that can be implemented in reference to Montreaux Chocolate USA. These alternatives include: further product testing, launching in selective test markets, staging a regional rollout, and launching nationally. As previously stated, additional product testing will enable the company to determine how aggressively it should infiltrate the US market. Previous product testing revealed unacceptable results concerning the introduction of the new product line, specifically the Montreaux dark chocolate with fruit product. Montreaux needs further information to determine the degree of success or failure of this new product line as well as how other product lines will be purchased by the general public. Additional testing would also enable the company to determine which markets will provide the greatest profit and then to target these markets accordingly.

Additional research would also allow the company to address issues related to product formulation, positioning, size, and packaging so that the company can produce and market a product that not only appeals to consumers but that also generates a significant profit. For example, “diagnostic information generated by the research found the 5-ounce stand-up pouch with healthy positioning to offer the greatest revenue potential, reconfirming the results of the focus group testing that found consumers respond very favorably to healthy messaging (with the smaller pieces aiding in the healthiness perception)” (Quelch 6). In addition, Francisco Redruello, senior foods analyst at Euromonitor International, advises that “extended flavor offerings, incorporation of multiple cocoa types and increased content along with luxurious packaging innovation must be a focus” and that “portion control is increasingly important” (Culliney 1). A second alternative involves launching the Montreaux products in selected test markets.

This alternative would give Montreaux Chocolates USA real-world information concerning its products which will be more beneficial and preferred in developing effective marketing strategies than information derived from laboratory studies. In addition, Montreaux could target/test market large cities to find out specifically how much product they should supply them with, thus infiltrating these large markets very effectively. A third alternative requires that the company stage a regional rollout. This alternative would benefit the company because regional markets are smaller than national markets, thus costing less while still providing valuable information concerning how the product will be received in target markets. In other words, Montreaux would have the opportunity to evaluate the product’s performance in regional markets and apply these findings to national markets, thus saving money while gaining the information necessary to successfully infiltrate larger markets.

However, the benefits of this alternative should outweigh the negative impact on the company’s profits in order for it to produce positive results. A fourth alternative necessitates that the company launch its product lines on a national scale. This would be a bold move for the company because of the risk and uncertainty involved in this type of launch. In other words, this alternative would either meet the company’s objectives in a big way or it would cause negative profits for the company. Again, the company needs to weigh the potential benefits vs. the risks involved in implementing this aggressive alternative and implement it only if they are almost certain that a national launch will be successful. Obviously, management should carefully review previous research before making this aggressive decision. However, if and when research provides promising and profitable results, the company should pursue a national launch, especially since the company wants to be the first to introduce the healthy dark chocolate product line and capture the profits that will be generated by being a forerunner in a competitive industry. Recommendation:

Again, the disappointing results derived from the BASES II testing indicate that the company should pursue additional test marketing before launching the new product lines. If the company intends to meet or exceed its first year sales of $30 million, more testing needs to be done in order to ensure that the product lines will generate the expected profits. In other words, additional testing will prevent the company from experiencing negative profits and poor acceptance of the new product lines among consumers. Unless the company wants to risk losing a great deal of money, a regional or national launch should not be pursued at this time. The company needs to strongly consider the positive effects of more product testing and consider the $3 million price tag as an investment rather than an expense, especially if future goals involve generating $115 million in sales by year-end 2015 and being in the top 25 in revenue testing.

After the company conducts additional testing that reveals acceptable and promising results, the company can then consider a gradual regional or national rollout, evaluate consumer buying patterns and behaviors, and then infiltrate target markets so as to avoid negative profits. This recommendation may take more time than one year in order to be effective, and the company should instead work to achieve a more reasonable sales goal that is still profitable rather than setting an unachievable goal of $30 million for their first year sales. The company can then plan to recover the $3 million investment spent on test marketing in terms of higher sales and profits in the future, as well as exercising patience and persistence in meeting more reasonable goals, so as to prevent their product lines from ultimately failing in the marketplace because of poor test results, unachievable goals, and ineffective marketing strategies.

However, despite the lackluster results of the previous test market research, Andrea Torres has good reason to be positive concerning the success of Montreaux Chocolate USA. Reports.mintel.com states that “the total revenue for the chocolate segment in 2011 was $17.664 billion and was expected to grow almost 2% annually through 2015” (reports.mintel.com 17). In addition, MarketLine reports that “chocolate is the most lucrative segment of the global confectionary market, accounting for 52.6% of the market’s total value. In 2011, Europe captured the largest regional share of the global confectionery market at 45.2%, with the Americas following at 33.9%” (MarketLine 8, 10, and 12).

Furthermore, kpmg.com reports that “global chocolate industry revenues will reach record US $117 billion in 2014” (kpmg.com 3). Torres should be confident that her decision to pursue additional test marketing will be positively received by David Raymond given that the chocolate industry has high total revenues and high market share in the U.S. At the board meeting she should present her colleagues with these impressive figures to convince them that additional testing will enable Montreaux Chocolate to achieve high revenues. She should also present the board with facts concerning the growing popularity of dark chocolate among health-conscious consumers, as research will more than likely reveal the huge potential for success in this growing market. Kpmg.com reports that “the most dramatic change in consumer taste is the surge in popularity of dark chocolate. Perceived health benefits have fueled a 93% growth in launches and dark chocolate now accounts for 20% of the U.S. market” (kpmg.com 3).

Works Cited

Culliney, Kacey. “Luxury Chocolate to Grow Developed Markets, Says Analyst.” Confectionerynews.com. 13 April 2015 http://www.confectionerynews.com/Markets/Luxury-chocolate-to-grow-developed-markets-says-analyst. Confectionerynews.com. 8 April 2015