The aim of this letter is to investigate and examine possible strategies for the upcoming launch of the new Montreaux-Apollo fruit chocolate into the US market. As there seems to be many uncertainties and doubts around what might seem strategically correct to draw a larger profit to the companies, what follow are my personal recommendations.
Time is tight; therefore, I believe is essential to move quickly in order to reach the desired goals by 2015.
First of all, I suggest we proceed with the launch of the product as soon as possible on a national base. I believe our competitive advantage will be in the ‘first-mover advantage’ against other possible competitors. Not to mention that the strategy is the one will give the company the biggest opportunity to increase revenue and market share.
National launch, between all the considered options, might result being the riskiest but it will give us the opportunity to first serve a rising niche of US customers: chocolate lovers who are also health and fitness focused. With 52.6% of the market, chocolate in US is the most profitable product in the confectionary industry and is expected to grow 2% per year as the demand is increasing. On the other hand, US citizens are more and more concerned with health and fitness, making our product the solution for this specific unserved segment of the population.
I strongly suggest not to proceed with further product testing, which would surely reduce risks and might give us hints for new opportunities, but the tests will delay the market entry, which will compromise the desired obtaining of first-mover advantage, in addition to the risk of providing similar data to the already existing one.
Launch in selected tests markets will surely give the company more consumer insights and consequently reduce the risks that are implied in launching new products in new markets, but it is extremely expensive and will delay the market entry of at least one year in order to obtain the correct readings. It seems not worth it in terms of investment as well as time efficiency.
Finally, a regional rollout will be safer than national as it will test the market first and then investing in expansion once the brand reaches the desired objectives and awareness. Montreaux-Apollo will start to acquire share dominance while limiting the starting investment expenses, although as Apollo is a well-established company in the States, positioning itself as the second in the global market, with an overall of 15.4% of the total market share, it already has the needed distribution channels to aim at a national expansion, ensuring itself the advantage against potential competitors.
In addition, Apollo has launched in the last 3 years 70 new products and the market reaction was good, meaning the company’s brand position and value is well established and its customers tend to be loyal to the brand.
Needed to be said is that to launch the product on a national level the acquisition of the new factory is needed in order to launch the product once sure to be meeting the customers’ demand.
Regarding the distribution, because of Apollo’s large sales force and brand recognition throughout the US it will access the traditional channels of distribution as “big-box” supercentres, supermarkets, drug stores, and convenience stores. ‘Grocery, drug, and convenience stores, and Walmart, collectively sold approximately 45.3% of the chocolate candy in the U.S. in 2011’ (case). The product will benefit by the big exposure Walmart will give to the product, as it is placed all over the US.
Worth to be mentioned, is the future rising competition and how, the company, shall be prepared to face it in order to keep a competitive advantage to any new comers.
While launching the new product, Montreaux-Apollo shall develop new product line extensions, which can either extend to chocolate candies, as Apollo already produces gum and candies, or perhaps expand into the snack chocolate bars to enhance the brand position for healthy products.
Needed to be discussed is with what name the new fruit chocolate will be launched into the market. Both brands are already established: Apollo in the USA and Montreaux in Europe. I strongly believe that a sub- brand name, such as Healthy Cravings, will be the best solutions, as the brand Montreaux might lead to a lack of credibility in the US, which could consequently affect the sales growth. On the other hand, Apollo, is already well established and positioned within the US food market, brand loyalty and customer awareness are already developed. As Apollo produces snacks, candies which are not exactly ‘healthy’ products, customers might be misled by the association of the company with the new line of healthy products.
I hope this letter sums up all the concerns and indicates, what I believe being the most successful strategies in order to make the launch of the new Montreaux-Apollo fruit chocolate in the United States a great success. Having said so, I am convinced that it will be a great success and both companies will beneficiate from this new market. Please do not hesitate to contact me for any further questions or doubts.