UWMCC Montreaux Case - First Place by Adrian

UWMCC Case Competition First Place 2014

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  1. Adrian Nguyen
    UWMCC Case Competition First Place 2014
    Transcript Header:
    UWMCC Montreaux Case - First Place by Adrian
    Transcript Body:
    • 1. “Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”
    • 2.  Situation  Big Questions  Ideal Corporate Targets  Thought Framework  Recommendation  Supporting Evidence › Qualitative and quantitative  Revisiting Corporate Goals  Summary  Supplementary Information
    • 3.  Apollo acquires rights to Montreaux for America on June 2011  Consumer Food Group (CFG), a subsidiary, forms Montreaux USA  Andrea Torres, director of new development, is faced with multiple decisions
    • 4.  Next steps for Montreaux USA? › How are we launching the product  Time to upgrade logistics? › Pennsylvania factory
    • 5.  American or European branding? › Heritage › New product line  Brand  Sub-brand  New product name?
    • 6.  National distribution of Montreaux product line  $115 million in annual sales by 2015  0.60% market share › Top 25 in revenue  Acceptable hurdle rate of $30MM › Needed for full national rollout
    • 7.  Support each decision with evidence  Calculate projections  Pros and cons matrix  Nielsen’s 12 Product Success Factors
    • 8.  Name › Euphoria by Healthy Cravings  Branding › Apollo sub-brand  Features › 70% Cocoa › Pouch Bag Format › Premium chocolate › Health positioning  Slogan  Flavours › Pomegranate › Blueberry › Cranberry  Price › $4.49 MSRP  Acquire Pennsylvania factory “Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”
    • 9. Further Testing The Market Launch in Selected Test Markets Stage a Regional Rollout National Launch Pros • Fine-Tune Consumer Insight • Gather Additional Consumer Insight • Middle-Of-The-Road Approach • Display Commitment to Retailers • Most Limited Liability and Risks • Most Representative of Market Condition • Average Expenditures • Biggest Opportunity to Increase Market Share • Discover New Opportunities • Limited Liability and Risks • Greatest Revenue Opportunity • Begin Market Share Dominance Cons • Possibly Redundant Data • Long Result Reading Time (1 Year) • Conservative Strategy • Very Expensive • Delaying Market Entrance • Delaying Market Entrance • Potential Lost Opportunity • Requires New Factory • Difficulty In Finding Suitable Test Markets • Less than 100% Commitment to Market • Greatest Resource Commitment • Convincing Retailers for Limited Batch Purchases • Requires New Factory • Most Expensive ($3 MM) • Poor Regional Selection • Limited Production Capabilities SELECTED LAUNCH PLAN
    • 10.  Market Trends  Product Choices  Capturing the Market › The Ideal Customer  Mainstream Distribution Channels
    • 11.  Low-calorie options such as reduced fat and aerated chocolate  Premium chocolate products moving to mainstream channels (i.e., supermarkets, mass merchandisers)  Dark chocolate popularity rise  Packaging transition to stand-up pouches and bigger sizes  New labeling with terminology emphasizing shareability, portion control, and saving a piece for later  Increases in pricing attributable to rising commodity costs
    • 12.  70% Cocoa concentration › Preferred taste versus 90% in qualitative testing › Emphasize health positioning  Bold Flavours › Blueberry, pomegranate, cranberry  Narrowed from top five ‘winners’  Pouch format › Shareability, portion control, economical › 3.5oz – less unique, less revenue generation  Healthy Cravings – Apollo sub- brand  Confusion in European credibility “Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”
    • 13. Socioeconomic Status Consumer Type Gender Differences Age  Cater to as many demographics as possible › 45-64 Age group › Everyday sophisticates › Brand loyalists › Women
    • 14.  Older aged upper-middle class female  45-64 age group  Motivations › Personal health considerations › Luxurious reward › Mood enhancement › Enjoys trying out new flavours
    • 15.  Purpose › Identifying ideal launch path  Calculating Sales Projections  Chocolate Market’s Future › Relation to Corporate Goals
    • 16.  Explaining the details Further Testing The Market Launch in Selected Test Markets Stage a Regional Rollout National Launch Pros • Fine-Tune Consumer Insight • Gather Additional Consumer Insight • Middle-Of-The-Road Approach • Display Commitment to Retailers • Most Limited Liability and Risks • Most Representative of Market Condition • Average Expenditures • Biggest Opportunity to Increase Market Share • Discover New Opportunities • Limited Liability and Risks • Greatest Revenue Opportunity • Begin Market Share Dominance Cons • Possibly Redundant Data • Long Result Reading Time (1 Year) • Conservative Strategy • Very Expensive • Delaying Market Entrance • Delaying Market Entrance • Potential Lost Opportunity • Requires New Factory • Difficulty In Finding Suitable Test Markets • Less than 100% Commitment to Market • Greatest Resource Commitment • Convincing Retailers for Limited Batch Purchases • Requires New Factory • Most Expensive ($3 MM) • Poor Regional Selection • Limited Production Capabilities SELECTED LAUNCH PLAN
    • 17.  Calculated all possible sales volumes scenarios using methodology formulas › Market-adjusted trial rates, repeat volume, etc. › 3^3 = 27 Possible Scenarios › Determined sales volumes  Combination of three factors › Awareness type  Marketing campaign effectiveness › ACV type  Market reach effectiveness › Product quality  Repeat rate of consumer
    • 18.  Calculating repeat volume Type Awareness Type ACV # of Trial Households (MM) Quality of Product % of Households Repurchasing Repeat Purchase Occasions Repeat Volume (MM) Low Low 2.82 Mediocre 28% 4 3.16 2.82 Average 33% 4 3.72 2.82 Excellent 38% 4 4.29 Medium 3.05 Mediocre 28% 4 3.42 3.05 Average 33% 4 4.03 3.05 Excellent 38% 4 4.64 High 3.71 Mediocre 28% 4 4.16 3.71 Average 33% 4 4.90 3.71 Excellent 38% 4 5.64 Medium Low 2.82 Mediocre 28% 4 3.16 2.82 Average 33% 4 3.72 2.82 Excellent 38% 4 4.29 Medium 3.71 Mediocre 28% 4 4.15 3.71 Average 33% 4 4.90 3.71 Excellent 38% 4 5.64 High 4.51 Mediocre 28% 4 5.05 4.51 Average 33% 4 5.95 4.51 Excellent 38% 4 6.85 High Low 3.42 Mediocre 28% 4 3.83 3.42 Average 33% 4 4.52 3.42 Excellent 38% 4 5.20 Medium 4.36 Mediocre 28% 4 4.89 4.36 Average 33% 4 5.76 4.36 Excellent 38% 4 6.63 High 5.30 Mediocre 28% 4 5.94 5.30 Average 33% 4 7.00 5.30 Excellent 38% 4 8.06
    • 19. $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 5.98 7.10 7.09 7.87 9.35 6.54 7.86 9.35 10.46 7.26 8.63 10.12 11.24 13.36 Salesin$MM Number of Purchases in MM Retail Sales Value ($ MM) Montreaux Sales Volume ($ MM) Acceptable Hurdle Rate  Band range of ACV, Quality and Awareness
    • 20.  Corporate 2015 goals overly aggressive › Despite double annual market adoption rate  Accomplished national rollout 2012 Market 2015 Estimate Aggressive 2015 Chocolate Market Size (BN) $ 17.664 $ 19.120 $ 19.120 Annual Growth Rate 2% 4% Average Montreaux Sales (MM) $ 39.02 $ 42.24 $ 45.65 Market Share 0.22% 0.22% 0.24%
    • 21.  Acceptable downsides › Taste  Findability › ACV focus  Product delivery and loyalty › New factory › Perpetual improvement
    • 22.  Market goals › Nielsen’s 12 Success Factors › Accomplished national rollout  Expand manufacturing capabilities › Pennsylvania  Montreaux USA marketing plan › Target demographics › Focus on supermarkets  Product specifications › Euphoria by Healthy Cravings › Pouch › 70% Premium Cocoa  American credibility › Sub-brand of Apollo “Introducing Euphoria Pomegranate by Healthy Cravings – Reward yourself with happiness and good health”
    • 23.  Opportunities › Partnering with other firm than the Big Two › Develop better infrastructure  Perhaps more factories and manufacturing centers › Product specifically targeted to men › Virtual integration with Suppliers  Mexico  Risks › Introduction of superior rival product › Product not well- tested › Manufacturing capabilities not up to par › Ability to Scale
    • 24. Competitive Rivalry Within Industry Bargaining Power of Buyers Threat of New Entrants Bargaining Power of Suppliers Threat of Substitutes  Bargaining Power of Buyers › Low to moderate › Large volume orders › Lack of threat of backward integration › Reliance on industry product  Threat of Substitutes › High › Alternate confectionery available › Competition during holidays  Threat of New Entrants › Low › Very expensive manufacturing costs › Lack of distribution channels › Regulatory restrictions › Confectionery and chocolate market relatively saturated  Bargaining Power of Suppliers › Moderate to high › Supplier group is concentrated › No threat of forward integration › Industry is important customer to supplier Source: http://jmfrrell.blogspot.ca/2011/06/chapter-4-industry-analysisporters-five.html  Competitive Rivalry Within Industry › High › Equally capable competitors › Slow growing › High storage and fixed costs › High exit barriers
    • 25.  Go through retail channels › Supermarkets and grocery focus  Premium chocolate moving into this distribution channel 15.8% 11.7% 9.0% 8.8% 54.7% Distribution Channels Breakdown Supermarkets/Gr ocery Convenience Stores Drugs Stores Big-Box Supercenters Other
    • 26. Bar/Bag/Box (> 3.5 oz), 7.149 Seasonal Chocolate, 4.407 Bar/Bag/Box( 3.5 oz) Seasonal Chocolate Bar/Bag/Box(
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