MONTREAUX CHOCOLATE USA:

Are Americans ready for healthy dark

chocolate?

Case Solution
Introduction
Apollo Foods was a Los Angeles, California-based, global consumer
packaged goods manufacturer and had a portfolio of brands,
manufactured confectionery, biscuits, snacks, beverages, cheese,
convenient meals and also offered packaged grocery items for
distribution in 170 countries. In July 2011, the Consumer Foods Group
(CFG) of Apollo Foods had purchased the rights to distribute
Montreaux’s European chocolate products in the U.S as a means of
increasing market share.
David Raymond, the marketing director committed to achieve these
goals by the end of 2015 year end:
1. National distribution of the new Montreaux product line
2. $115 million in sales
3. Be in top 25 in revenue (0.60% market share)

Problem statement
Should Andrea Torres, director of new product development at
Montreaux chocolate go for further product testing; test market the
product in selected test markets; plan a regional rollout or launch the
product nationally?
The test would further push the timeline for the introduction of the
product in the market and also present an element of risk as it provided
the competition with an advance notice of Montreaux Chocolate USA’s
new product plans and to test how the market responds to the newly
launched product and respond accordingly.
Possible solutions
1. Further product testing
2. Test market the product in selected test markets
3. Plan a regional rollout
4. Launch the product nationally

Learnings
New Product Development Process:

Marketi
Concept ng
Idea Idea Product
Develop Strategy Business Market Comerci
Generati Screenin Develop
ment & & Analysis Testing alization
on g ment
Testing Develop
ment

Here, Montreaux is already at the Product Development stage, the

question to the management is whether to skip Market Testing and go
directly to Commercialization due to the lack of time and competitor
coming up with new product.
Before going into answering that we need to see the options available
in Market Testing.
Types of Market Testing differs for commercial and consumer goods.
Method available for consumer goods are:
1. Sales Wave: Giving Free Samples or trials and getting responses
from that. ales Waves are respondent interactions that take place
directly after the completion of a marketing research interview or
 in subsequent waves. A Sales Wave gives the respondent the
product or service that was the topic of the initial interview.

2. Simulated Test Market: Simulated test marketing is a form of

market research where consumers are subjected to a virtual
market situation in order to assess consumer reactions to
product, service or marketing mix variations. 30 to 40 qualified
shoppers were called and questioned brand familiarity and
preferences in a specific product category. These consumers
attended a brief screening of well-known as well as new TV
commercials or print ads. Consumer are provided small amount of
money and they are invited to a store where they may buy any
items. This provides a measure of the ads relative effectiveness
against competing ads in the market. This method gives fairly
accurate result of effect of ads and trial rates. The results are
incorporated in to new product forecasting model to project
ultimate sales levels.

3. Controlled Test Marketing: A panel of stores carries new product

for a fee. Under this test, the company select certain stores in
different geographic areas and ask them to keep its new product
into their stores in return for a fee. The company controls the
shelf position, displays, point of purchase promotions and pricing.
A sample of consumers interviewed later to give their impression
of the product.

4. Test Markets: Under this, the firm chooses the representative

cities where the full-fledged launch of the new product is done
starting from the promotion campaign to the ultimate sales. Once
it is successful, the firm goes for the national launch
Recommendation
The calculations suggest that if we are going for an average product in
order cross the minimum hurdle rate which is $30mm, we need to have
a combination of medium support customer awareness and high ACV
or high support customer awareness and high ACV. Also, suppose we
assume that we are going for an excellent product then through
calculations we get that the min hurdle rate is crossed when you have
high support customer awareness regardless of the ACV, based on the
target markets as are identified and used for the exhibits. Based on
these insights, we can conclude that the firm needs to invest in high
customer support awareness, which means a high marketing
expenditure, along with excellent product.
Therefore, in keeping with the learning we recommend a controlled
test market, before the organization jumps in commercialization stage.
The Controlled Test Marketing is a smaller scale version of the full-
blown Test Marketing Strategy, meaning that it will provide us an edge
in terms of lower costs and time incurred.
The following need to be gleaned from the Controlled Test Market:
1. Warehousing Data
2. Retail Audits
3. Consumer Insights
During the testing, if
1. First buy > Repeat Buy -> Don’t launch the product, rectify the
issues after survey and send it to Product Development Stage.
2. First Buy = Repeat Buy -> Go ahead with commercialization.
 3. Both First and Repeat Buy are bad: Go back to Idea generation
phase.
4. Repeat Buy > First Buy -> Go ahead with Commercialization, after
improving Marketing and Communication.
Once this is done, Montreaux can go for Commercialization. Another
advantage of the Controlled Test Market is that we will be less
conspicuous, and this might prevent competition from gaining our
information. Regarding the threat of competitor entry during the
Controlled Test Market, we cannot match their entry at this stage, but
are willing to bear the cost of not being first mover for the benefit of
insights gleaned from Controlled Test Market, and due to it being a
smaller scale initiative, if the competitor launches, we can also launch
meaning that we can be restricted to Parallel entry as well.