Nadine BialostozkyRoy KatzYehuda AdamsTeacher: Dr. Hagit PerryTA: Mr. Jonathan (Yoni) BleichValue Driven MarketingJanuary 29, 2018Over 15 months had passed since Consumer Food Group (CFG) of Apollo Foods, a global consumer packaged-goods powerhouse, obtained the rights to distribute the well-known European chocolate company, Montreaux, in the United States. The director of new products at Montreaux Chocolate, USA, Andrea Torres is presented with the challenging task. At an upcoming board meeting, Torres is expected to present the statues of the Montreaux acquisition and plans for introducing the new product into the U.S Market. Andrea Torres must evaluate her options and make decisions for the following, to further test the product, pursue test marketing in selected markets, launch the product through a regional rollout plan, or launch the product nationally. While presenting her recommendations, Torres should be self-assured that the objectives such as national distribution of the new product line, the goal of $15 million in annual sales, and the achievement of the top 25 revenue, will be accomplished in the next three years. As a group, we recommend Apollo to nationally release the new product, but advertise it under a different brand name, Healthy Fixes, this will help target those consumers with a healthy mindset. After carefully reviewing the case we have decided that this sub-brand name will help Montreaux chocolate to enter the US market and attract those customers with health and fitness fixations. The product can be marketed as a healthy fruit filled snacks that contain dark chocolate, an antioxidant. We would recommend that the chocolate be sold in supermarkets, coffee shops, convenience stores, etc. and be placed in exhibition stalls, so that they are seen more clearly by the customer, and not with all the other chocolates on the never-ending aisles. This will surely bring other players that will try and imitate Montreaux, but to endure a competitive advantage Apollo should start making new products to elevate this product line. Since Apollo is already specializing in other types of candies, they can experiment with dark chocolate and other candies. This is our suggestion to Apollo in their quest to penetrate the market with Montreaux chocolate. The key issues that Andrea Torres must address for the success of the new product line are in relation to marketing challenges and production facilities. Not only does Torres have to focus on manufacturing the product while controlling the cost, she must address the marketing issues such as the name, size of the package, the packaging itself (product), the promotion, its position, as well as the price (4Ps). All these aspects are key to the success of the new product line, it is what the customer will remember and hopefully, it will lead the customer to associate the brand with a positive perception. These key issues have great importance in establishing the product in the market. It is important for Torres to understand what the customer’s likes and his/her preferences when it comes to purchasing. Without the development of these key issues, the product will not be well established and will not lead to a positive impact on the company of the customer. In the upcoming three years, Montreaux US wants to distribute their new Montreaux product line nationally, reaching $115 million in annual sales, as well as be in the top in the top 25 companies in total revenue. Chocolate is the most profitable area of the global confectionery market, it accounts for 52.6% of the market total value. Europe captured the most regional market share in 2011 with 45.2% of the market, followed by America with 33.9%. The demand for chocolate is increasing, data shows there will be a 2% annual growth in the U.S chocolate market through 2015. This would be a very profitable time to enter the market and introduce a new chocolate line. As the chocolate market in the U.S sought growth, so did the consumers’ focus on fitness and health, this prompted Montreaux to consider expanding its chocolate offering to include products that featured a healthier dark chocolate with infused fruit flavors. In the past Apollo Foods has been very effective in introducing new products into the market. Widespread research proves that there is an increase in the market for a dark chocolate product which is low in calories. The two companies are in a perfect position to introduce a product and reach their company objective. With great new products, comes attraction and it is imperative that Apollo is ready for competition as well as the possibility of not accomplishing the company objective. In 2011 Apollo’s revenue was upwards of $54 billion as well as coming second in the global market with a share 15.4%. In the four years from 2007 to 2011, the global confectionery market has developed a substantial growth rate of 2.8%. All this and as mentioned, the U.S chocolate market is expected to see the growth of 2% by 2015.In the past Apollo is not known for chocolate, but its gums and candies, and achieving a global ranking of two. Apollo has carried over 70 new successful products in the market in the last three years, it has a strong brand value which is beneficial when carrying a European brand chocolate, but can also be a threat to Apollo in the U.S market since it is not well known to consumers.For the new product development at Montreaux, it was decided to partner with Nielsen BASES to quantitatively assess and optimize the new dark chocolate initiative. BASES is a concept screening system designed to assist in prioritizing a range of new ideas and focus on the ones that have true consumer potential. The system is fast, but it is also known to be far reached. This may lead to credibility issues on concept testing.The health conscious was also on the rise and people preferred dark chocolates due to its reduction in cholesterol and cardiovascular benefits. Chocolate consumption in specific market research shows that women consume slightly more chocolate than that of men (94% versus 90%). The age group of chocolate consumption per capita is from 45-64 and those figures were rising.Montreaux’s target audience includes women in the age range of 45-64 who were concerned with their health. Consumer buying intentions included those preferring premium chocolate (believe it is healthier), and disregarding low-quality chocolate that usually contain artificial flavor, fillers or other additives. Consumers prefer mini and snack size packaging which leads back to the health and wellness, indicating their efforts to control consumption. The distribution channels of 2011 approximated 45.3% of chocolate candy in the U.S which were sold in grocery, drug and convenience stores, and Walmart. 4. Using the forecast model for the healthy dark chocolate product with fruit tested in the BASES II test inAugust 2012, provide your forecast for the demand for the new chocolate product.Hints:Conduct a sensitivity analysis by using the factsprovided regarding consumer awareness, ACV and repeat rates for mediocre,average, and excellent products.The Excel supplement provided with the caseshould prove useful.The forecast for the BASES II test was a sales forecast that would meet or exceed the $30 million hurdle rate, a retailer gross margin of 35% and a retail price of $4.49 but in the real sense the forecast would be sales of $15 million hurdle rate, a retailer gross margin of 20% and a retail price of $2.5 since the product is still very new in the market.