Luxury and Fashion Management Final Project by chelsea.chiu

Chocolate Extension Luxury and Fashion Management MA Final Project Chen Wei Chiu Professor Franca Canepa

TABLE OF I. Abstract..........................................................................................4 II. Introduction....................................................................................5 III. Project Strengths and Weaknesses..................................................7 IV. Company Overview 1.1 Company History..................................................................10 1.2 Mission and Values...............................................................12 1.3 Products and Services...........................................................13 1.4 Price Point............................................................................15 1.5 Performance.........................................................................16 1.6 Customer Analysis................................................................18 1.7 Competitors Analysis...........................................................19 1.8 Strengths and Weaknesses....................................................19 1.9 Outlook for the Future..........................................................20 V. Secondary Research 1.1 Overview of Luxury Brands and the Food Industry..............22 1.2 Overview of the Jewelry Industry.........................................24 1.3 Overview of the Chocolate Market.......................................25 1.4 Overview of the Premium Chocolate Brands.......................32 1.5 Potential Manufacturers of the Premium Chocolate.............44 1.6 Consumer Analysis...............................................................47 VI. Primary Research 1.1 Research Design...................................................................52 1.2 Potential Customers..............................................................52 1.3 Profile of Interviewees..........................................................54 1.4 Interview Questions..............................................................55 1.5 Results Analysis of Interview...............................................56

CONTENTS VII. Key Findings for Secondary and Primary Research 1.1 Key Findings for Secondary Research.................................68 1.2 Key Findings for Primary Research.....................................69 1.3 Key Findings Analysis.........................................................70 VIII. Project Strategy 1.1 Mission and Values..............................................................74 1.2 SWOT Analysis...................................................................77 1.3 Target Customer...................................................................78 1.4 Placement and Environment................................................80 1.5 Products...............................................................................82 1.6 Pricing Strategy....................................................................86 1.7 Services...............................................................................87 1.8 Promotion Strategies............................................................89 1.9 Budget Allocation..............................................................101 IX. Measurement.............................................................................104 X. Conclusion.................................................................................104 XI. References.................................................................................105

ABSTRACT Tiffany & Co. is an American luxury jewelry brand. Its history reaches back 180 years, and its iconic “Tiffany Blue” is still a unique and popular color around the world. However, the company also faces problems like every luxury brand when sales decline due to the increasingly competitive luxury industry. Many luxury brands are extending new product lines such as home goods, hotels, interior design, restaurants and bars to increase customers’ interest. Undoubtedly, food extension is a prevalent choice for luxury brands. Prada, Dior and Hermès have opened personal dessert stores. Burberry, Vivienne Westwood and Chanel have their branded coffee shops. Gucci and Alfred Dunhill opened restaurants in China. This kind of luxury food extension is becoming a new trend. In addition, unlike the jewelry industry, the chocolate market presents strong growth in recent years. People are fond of chocolates emotionally and it is popular to buy chocolate for loved ones or friends as gifts. People usually think Tiffany products should be gifts that men buy for women to express their love. However, chocolate doesn’t follow this rule. It can be a gift for anyone to express love. If Tiffany can combine their iconic blue box with delicious chocolate, the new product has the potential become another beautiful, luxurious gift.

Key Words: luxury industry, luxury brand, jewelry, Tiffany & Co., brand extension, chocolate market, food industry, premium chocolate

INTRODUCTION In today’s society, it is not surprising to see many luxury brands start developing their brand extensions in diverse areas such as hotels, cosmetics, interior design, and restaurants or cafes to find other potential markets. However, common luxury goods are not enough anymore. Consumers are quickly growing bored and dissatisfied if a brand does not possess any key difference to distinguish it from other brands. Plenty of luxury brands have begun to get involved in multiple industries to provide more unique products and services for their customers, especially food extension. Luxury brands increasingly open their own restaurants, cafes or bars to create an attractive experience and environment to make consumers want to visit several times. Tiffany is one of the luxury fine jewelry brands that has also started participating in this competitive market. In 2017, Tiffany opened the first The Blue Box Cafe on the 4th floor of its New York flagship store. The cafe serves the highest quality dishes and afternoon tea for the customers. “Breakfast at Tiffany’s” not only exists in the iconic movie, it is reality. In addition, it is interesting to find there are some luxury brands, such as Georgio Armani and Bvlgari, directing their attention to the chocolate industry. Although sales in the jewelry industry have been declining recently, the chocolate market is seeing stable growth. In Asia or Western countries, people readily connect chocolate with love, especially if it’s a gift on Valentine’s Day. People often buy chocolate as gift for their partners, family or friends. Tiffany is also a jewelry brand usually associated with love, romance and gifts. If the brand can combine with chocolate, it has the opportunity to produce other romantic and appealing merchandise. Therefore, this project will research on potential customers to analyze their chocolate preferences and attitudes about Tiffany’s chocolate extension. After analysis from secondary research and primary research, the project will develop marketing strategies to help Tiffany promote their new chocolate products. The communication objectives of marketing strategies can be divided into four steps: 1) Connect the idea “chocolate is a gift to express love,” 2) Decide a store location, layout of the chocolate store, and online sale strategy, 3) Identify chocolate products including chocolate assortment such as chocolate types and flavors, and packaging, and 4) Develop promotion strategies such as digital media, print media, and opening events.

Project Strengths and Weaknesses For this project, the main strength is helping Tiffany & Co. to find a new product extension to improve their declining sales due to a decrease in marriage rates and less consumption from the younger generation. Most fine jewelry brands seldom develop into food businesses, but food business have started becoming another fashion trend in the luxury industry. Unlike jewelry products, chocolate does not have any gender associations, and the price is more affordable for most people compared to jewelry. Chocolate is also an emotional product. It can help Tiffany to build a connection with the consumers because jewelry products usually emphasize quality instead of emotional communication. However, a risk also exists for the new extension. The project only interviews a few people so that the results may not be accurate. If Tiffany wants to promote a chocolate line, the company should do more surveys and market analysis to evaluate the projectâ&#x20AC;&#x2122;s feasibility.

COMPANY OVERVIEW

COMPANY HISTORY Tiffany & Co. was established by Charles Lewis Tiffany and his childhood friend, John F. Young, on September 14, 1837 at 259 Broadway in New York. The first day’s sales total was only $4.98, but the store grew during its first few years of operation and eventually expanded its products to include glassware, porcelain, cutlery, clocks, and jewelry. The Tiffany Blue Box was also introduced in 1837 and became their iconic package. Due to political turmoil across Europe in the late 1840s, the price of diamonds from European brokers declined. Charles Lewis Tiffany took advantage of this opportunity and invested massively in precious stone. The shop became primarily a jewelry store because of this acquisition (Ellen, 2016). The store reorganized after Charles Lewis bought out the other two partners and changed the name to Tiffany and Company in 1853. It continued to grow and became famous as a luxury retailer.

In 1845, Tiffany’s Blue Book was published, and it was the first mail-order catalogue in the U.S. The catalogue sold a variety of merchandise from horse whips to French sugarplums. Today, the Blue Book features the world’s rarest and most beautiful jewels. In 1886, The Tiffany Setting diamond engagement ring was introduced by Charles Lewis Tiffany and it has played a part in the world’s greatest love stories ever since. People started connecting engagement and marriage with the brand. In 1902, Charles Tiffany died and John C. Moore became president of the company. Under Moore’s leadership, sales increased from $7 million in 1914 to $17.7 million in 1919 (Ellen, 2016). However, the economic conditions at that time had serious consequences for the company’s performance, and sales declined due to the Great Depression. Although the Great Depression had detrimental effects on Tiffany’s, the company still overcame this challenge successfully.

In 1940, Tiffany moved for the last time and opened its door at the corner of 57th Street and Fifth Avenue, where its flagship store exists today (Ellen, 2016). When Walter Hoving became Tiffany’s new chairman and CEO, he recruited a “galaxy of stars” to construct a new standard of quality for Tiffany’s products (Ellen, 2016). During this revival, the staff in the jewelry workshop rose from eight members to sixty, and new designers, such as Paloma Picasso were hired to create jewelry only for Tiffany. Another crucial strategy of Hoving’s plan was extending Tiffany’s client base by introducing low price point items such as key chains to broaden the customers base. In 1978, Tiffany & Co. was sold for $104 million in common stock to Avon Products, Inc., which was the world’s leading manufacturer and distributor of cosmetics and costume jewelry. However, Avon agreed to sell Tiffany in 1984 to an investor group led by chairman William R. Chaney (Ellen, 2016).

Under his new management, Tiffany & Co. shifted direction again. The company went public in 1987. Tiffany’s emphasis on luxury attracted the masses. Until the 1990-1991, Tiffany started to emphasize on mass merchandising due to the recession in the U.S. The company rebranded and marketed itself as being available to anyone and affordable for all. In 2000, the Tiffany & Co. Foundation was established to provide grants to environmental and artistic nonprofit organizations. In 2009, the pendant collection Tiffany Keys was launched. It became another successful product. In 2017, luxury industry veteran Alessandro Bogliolo became Tiffany’s new CEO due to the current challenge of sales. The company hopes the new CEO can reinvigorated this 180-yearold brand and continue their history of innovating new luxury products.

MISSION AND VALUES The company’s mission is concentrated on creating fine jewelry with social and environmental responsibility. Tiffany believes the company has a moral duty and corporate responsibility to sustain the natural environment and contribute to communities where they operate using their voice and actions. It will continue to make a positive impact and help build the standard for the luxury jewelry industry through its brand influence. The company strives to not only become “the world’s most respected and successful designer, manufacturer and retailer of the finest jewelry,” but also conduct business in an environmentally and socially responsible way (Ellen, 2016). Therefore, sustainability is part of Tiffany’s cultural values.

PRODUCTS AND SERVICES Tiffany & Co. has a variety of product lines including engagement rings, jewelry and high jewelry, watches, fragrance and home and accessories. The jewelry can be divided into different categories such as necklaces and pendants, bracelets, rings, earrings, wedding bands, Tiffany charms, pearl jewelry and men’s jewelry. Home goods include tableware, barware, coffee and tea sets, desks, decorative boxes and trays, decorative accents, frames, games and novelties and Elsa Peretti Home. Accessories are extremely broad including leather goods, eyewear, money clips, key rings, cuff links, textiles and Elsa Peretti Accessories. Tiffany’s merchandise is designed by several well-known jewelry designers such as Jean Schlumberger, Elsa Peretti and Paloma Picasso. Tiffany is famous for their wedding products such as engagement rings and wedding bands and diamonds, but they also provide a variety of lower-price jewelry products for general people to purchase.

To assist customers in choosing gifts, Tiffany has a separate gift area on their website, so customers can easily search their ideal gifts depending on gender and occasion. In addition, Tiffany also provides a personalization service for customers to create an item based on their own personality, experiences, loves, dreams and quirks. Customers can choose engraving, embossing, embroidering or etching to add a unique layer of intimacy and meaning to their gifts, whether for a loved one or for themselves. In 2017, Tiffany & Co. opened their first Blue Box Cafe on the 4th floor of their New York flagship store. The cafe serves American classics made with the highest quality regionally-sourced ingredients. The menu will evolve through the seasons to refine signature New York dishes to be uniquely Tiffany. The movie Breakfast at Tiffany’s has become an accessible experience for all Tiffany’s consumers.

Tiffany not only sells physical products, but also constructs people’s expectations about love and romance. According to “Marketing Romance with Tiffany & Co.” (2014), Gorson describes that Tiffany advertises its engagement rings via the digital media by incorporating the rings within an entire love theme for the whole brand. In this way, Tiffany sells the idea of love to its consumers instead of merely selling jewelry. The romantic story established throughout the campaign is appealing to those people who hope to be in love or want to reveal their love to others. Tiffany has successfully used this advertising approach to prove the power of marketing beyond product benefits by attracting consumers through an emotional connection to brand narrative (Gorson, 2014). Another example of harnessing emotions through marketing is Tiffany’s blue box. For some people, this blue box symbolizes 180 years of design and style. For others, it guarantees extraordinary, high quality jewelry. The magical impact of Tiffany’s blue box is that it sparks an emotional connection. The design, style and quality are at the core of Tiffany & Co. and translate to love (Ellis, 2014). Thus, Tiffany not only creates an effective brand message through its products and package, but also builds a powerful emotional connection with its consumers beyond the jewelry.

PRICE POINT Depending on the category, Tiffany’s price point can be extremely expensive or a more affordable price. For example, Tiffany diamond engagement rings are offered from just over $1,000 to over $1,000,000 depending on customer’s needs and budget. The price can be higher due to a larger diamond or high-end materials. The price of Tiffany Keys pendants is around $5,000 to $11,000. Jewelry such as silver pendants or 18k gold necklaces come cheaper, with a price of around $100 to $2,000 depending on materials and categories. The price of watches is around $3,000 to $16,000, and leather goods are around $100 to $1,500. Generally, quality of materials and the complexity of design will influence the jewelry’s product price. Therefore, the price range of Tiffany & Co. is extremely wide.

PERFORMANCE According to the Tiffany & Co. 2016 Annual Report, the number of Tiffany & Co. retail locations increased by 38 stores since 2012. In 2016, there were 313 retail locations around the world. The retail locations include the United States, Canada and Latin America, Asia-Pacific, Japan, Europe and emerging markets. In addition to retail stores, the company operates e-commerce stores in 13 countries and information websites in several countries. Sales managed on those websites accounted for 6% of worldwide net sales in 2016, 2015 and 2014. The management believes that theses websites play an important role as marketing tools to attract customers to the physical stores.

Source: Tiffany & Co. 2016 Annual Report Although Tiffany is eager to extend global retail locations and websites, the company’s net sales present a decline from 2015 to 2016. According to the report, net earnings decreased from $463.9 million to $446.1 million. Worldwide net sales of 4 billion were 3% lower than a year ago, reflecting declines in the Americas and Europe, and partly offset by an increase in Japan and unchanged sales in Asia-Pacific. Comparable store sales declined 5% due to decrease in all regions except Japan. Tiffany and the broader luxury industry were faced with macroeconomic challenges in 2016 such as geopolitical uncertainties and volatile currencies, which the company believes influenced spending by both local customers and foreign tourists. According to the article “Tiffany's Sales Are Falling Off a Cliff,” United States is Tiffany’s home market and its largest one, and tourists account for 25% of sales, but comparable sales dropped 10% for the Americas as a whole (2016). Alongside declining consumer confidence, consumer spending for discretionary goods is also generally decreased, negatively affecting the company's sales and earnings.

Source: Fortune, 2016 Moveover, about 75% of Tiffany's stores are located within luxury department stores and shopping malls and benefit from the consumer traffic produced by those locations. Therefore, a decrease in department store and/or mall traffic may negatively affect the company's ability to maintain or increase its sales in existing stores or open new stores. The decline in the number of jewelry units sold also reflects decreases across most categories, especially in fashion silver jewelry. The cost of silvery jewelry items is less than $500 and accounts for around one-quarter of total sales. Results still have remained weak despite large scale efforts to improve that category (Wahba, 2016). In other words, people who purchase fashion silver jewelry are fewer than before, and the company faces the challenge of declining sales as well due to declines of tourist spending on jewelry and slower sales of lower-priced items. It is critical for the company to find a way to overcome this current difficulty. Tiffany & Co. should leave its comfort zone and embrace change. It could start reaching out to customers who traditionally ignored by the jewelry industry.

CUSTOMER ANALYSIS On the topic of customer analysis, Tiffany’s customers can be identified by demographic factors such as gender, age and income. Their customers include male and female, ages from 25 to 55 years old and higher incomes. Although most of their products are designed for women, they also sell men’s products such as men’s jewelry, watches and leather goods. The psychographic of Tiffany’s customers includes people who desire fashion and luxury products and want to associate with the brand name. They are fashion trend followers. They are willing to spend more money to purchase high quality and luxury goods. They are attracted by symbols of sophistication and exclusivity such as Tiffany’s iconic blue box. The target market of Tiffany includes gift givers/receivers, especially during special occasions such as proposals, engagements, weddings, birthdays, Valentine’s Day and other holidays..

COMPETITORS ANALYSIS Going by similar price range, product category, and the target market, this project has selected two main competitors of Tiffany & Co. in the United States: Blue Nile and Bvlgari. Blue Nile is the largest online retailer of diamonds in the United States. The company was established by Mark Vadon in 1999. The brand offers more than 60,000 diamonds on its website, and their main product is their engagement rings. Blue Nile operates the company with no physical store and no intermediaries, so it can provide products four times cheaper than competitors. The brand is known for customized jewelry at a lower price than most retailers will sell. Bvlgari is an Italian fine jewelry and luxury goods brand that produces a variety of products categories including jewelry, watches, leather goods, accessories, fragrances, hotels and resorts. It also provides wedding bands and engagement rings. The company was established in 1884 and has 134 years of history behind it. Both of Blue Nile and Bvlgari are Tiffany’s competitors in the jewelry industry.

STRENGTHS AND WEAKNESSES As for strengths, Tiffany has long history of 180 years, and their customers have strong brand loyalty. The company produces high quality products designed by famous jewelry designers, and it has high brand recognition. They concentrate on innovation and sustainability to present themselves as an environmental friendly company in the luxury fine jewelry industry. Many celebrities are associated with wearing Tiffany’s jewelry to promote and market Tiffany products as luxury. As for weaknesses, Tiffany’s products are expensive, and most people are unable to purchase them. The brand has started losing its emotional connection with customers due to lack of media advertising and sales promotion. The decline of marriage rates and the more competitive environment in the jewelry industry have also hurt the company’s sales.

OUTLOOK FOR THE FUTURE In response to lower marriage rates and less consumption from Millennials, Tiffany & Co. should consider how to rebuild an emotional connection to stay relevant to a new generation rather than just showing advertisements about it or remaining its original strategy. For example, the company could market more on women who rewards themselves with luxury jewelries and turn the stereotype of men buying beautiful objects for their partners. In addition, some young consumers have starting thinking of Tiffany as an old brand purchased by their parents’ generation. There are more new and competitive jewelry brands growing rapidly, such as Pandora, which are attractive to young customers and boast more affordable prices than Tiffany’s. Although most people believe in Tiffany’s high quality, the company is still losing its customers. Last year, the Blue Box Cafe opened. Tiffany began developing their food extension in the luxury industry. In the future, the brand will need to think about how to attract customers’ attention and encourage them to stay longer in its stores. This may become the brand’s opportunity to build an enjoyable environment and service for customer to experience instead of only focusing on high quality.

SECONDARY RESEARCH

Overview of Luxury Brands and the Food Industry Today, luxury brands are growing at a fast rate around the world, and the industry is highly competitive. However, when every luxury brand provides the same products for the customers, they face an implicit c h a l l e n g e : H o w t o m a k e a br and different from other brands? Many luxury brands started thinking about this problem and developed different marketing strategies. Brand extension

There are strong reasons why numerous brands have chosen the food industry for brand extension in recent years. Many luxury brands have opened their own restaurants, cafes and bars. Bearne (2015) explains the reasons why more and more luxury brands have started launching cafes and restaurants in the article â&#x20AC;&#x153;Why Fashion Retailers Are Staging Food Experiencesâ&#x20AC;? (Business of Fashion). It is because food creates a

is one of the most common strategies for luxury brands to create some new and attractive products. For example, Georgio Armani is known for high-end fashion wear collections, but the brand has also started developing its brand extensions in other industries such as hotels and resorts, accessories, chocolate businesses, floral arrangements, and interior design. Another example is Bvlgari. It is an Italian luxurious fine jewelry brand. The brand also provides several categories of products including leather goods, accessories, fragrances and hotels. Plenty of luxury brands have begun involving various industries to pursue diversification. Undoubtedly, this phenomenon of crossover development is becoming more and more critical for success in the luxury industry.

reason for customers to visit and spend more time with the brands. Product is not enough. Cafes and restaurants can build a space and atmosphere around the brand to enhance customer loyalty and give consumers a chance to shop. Social media is also instrumental in promoting this new trend. Not everyone will to buy an expensive handbag or a charming lipstick, but everyone need to eat. Eating is a basic demand for each person. When luxury brands create a place that gives customers a reason to visit and stay for a long time, they produce opportunities to promote a lifestyle and construct an emotional connection with their customers through a brandâ&#x20AC;&#x2122;s image and service.

In addition, there is a strong growth in the trend of people eating out more frequently than before. More people choose eating out instead of cooking by themselves, and this phenomenon will extend luxury brandsâ&#x20AC;&#x2122; potential in the food industry. According to Mintel (2015), the dining out sector continues to reveal strong growth, with sales estimated to have increased $87 billion from 2009 to 2014 in the U.S. Additionally, Chinese consumers are spending more on premium dining choices due to rising incomes, leading to food expenses service rising 8.1% to RMB 799 billion ($129 billion) in 2014 (Mintel, 2015). In other words, those Chinese tourists will become another strong potential consumer. In 2014, specialist coffee shops reported $19.1 billion in sales in the U.S. according to the research company Euromonitor International, up from $16.6 billion in 2009. Whether in Asia or North America, more and more people prefer eating out and enjoying food and drink in a premium environment. Food is becoming another global trend in the luxury world.

CafĂŠ Dior by Pierre HermĂŠ

Ralph's Coffee & Bar

Overview of the Jewelry Industry In contrast to the food industry, today’s jewelry industry needs to face a tougher and more competitive environment. In the article “Tiffany's New CEO Faces Jewelry Industry That's Lost Its Sparkle,” Wong (2017) describes how the current jewelry industry faces a decline in sales. The $60 billion jewelry market shrank 6.3% in 2016, and the research company Euromonitor International estimates the declines will

Another problem is jewelry sellers have lost their emotional connection with their customers because retailers focus on certificates of a diamond’s quality to attract shopper attention. They sell jewelry by emphasizing a diamond’s quality more than its emotional significance. Besides, the decrease of marriage rates has also hurt the industry. According to the Pew Research Center, fewer than half of U.S. adults are

continue until at least 2022. According to the Jewelers Board of Trade, closures of jewelry store increased 53% in 2016. In other words, the jewelry industry is struggling and losing its consumers. Fewer shoppers go into jewelry stores due to the decrease in marriage rates and less consumption from Millennials (Business of Fashion). Young consumers are showing more interest in purchasing technic items such as mobile phones and less interest in jewelry because they prefer to spend on products that can bring more experiences rather than luxury goods.

married today, compared with 72% in 1960. The decline in marriage rates led to fewer customers, a shrinking market and decline of jewelry sales. Even a renowned company such as Tiffany & Co. faces these challenges. It is crucial for the company to start thinking about how to attract younger consumers and push sales.

Source: Pew Research Center, 2017

Overview of the Chocolate Market Compared to the struggles of the jewelry industry, the chocolate market is noticeably growing. The demand for chocolate in both North America and Europe will likely grow over the next five years, and the Asia-Pacific region's chocolate market will increase approximately 23% to some $16.3 billion by 2018, based on statistics from Euromonitor International (2014). People are fond of chocolate, and consumption ability continues to rise, and many companies are also developing better supply chains to produce chocolate. As consumers’ taste in other countries become more Westernized, demand for chocolate market has been insatiable. This will also increase cocoa demand around the world. In addition, the United States is the world’s largest chocolate market based on “Mintel’s Chocolate Confectionery – US, 2015 Report.” According to the report, chocolate confectionery maintains popularity in the U.S., where 85% of adults buying chocolate. Chocolate confectionery sales grew 24% over five years from 2009 to 2014 to reach $21 billion in the United States, and the U.S. chocolate market is forecasted to reach $25 billion in 2019 (Mintel, 2015).

In another statistic from â&#x20AC;&#x153;Chocolate Sales of the United States from 2013 to 2017,â&#x20AC;? chocolate sales are estimated to reach around 22.4 billion dollars in 2017 in the United States (Statista, 2018). Overall, revenue in the Confectionery segment amounts to $72 billion in 2018 in the United States (Statista, 2017). Confectionery can be divided into four segments: Chocolate Confectionery, Sugar Confectionery, Cookies and Crackers, and Ice Cream. Chocolate Confectionery includes all chocolate products with the exception of biscuits, spreads containing cocoa or white chocolate. Revenue in the Chocolate Confectionery segment amounts to $26 billion in 2018, which is more than other three segments, and it will continue to grow. These articles prove that chocolate will be a profitable business in the future.

Source: Statista, 2017

Furthermore, chocolate business is also becoming popular for luxury brands such as Armani and Bvlgari which have started selling their own chocolate products. According to the article “Bvlgari Brings Chocolate Gems to Tokyo,” the luxurious Italian jewelry company Bvlgari has already brought a high-end chocolate business to Japan. The company does not sell chocolate in many countries, it’s only available in Japan and Dubai. Bvlgari also provides personalized chocolate for both groom and bride for their wedding day. The brand makes Bvlgari chocolate appealing to Japanese consumers through seasonal and local flavors, without compromising on its image as a high-end jewelry brand. Giorgio Armani also developed its chocolate brand “Armani/Dolci” and opened the store on 5th Avenue in New York City. In other words, Bvlgari and Armani will be good examples for Tiffany to follow as it develops its chocolate business.

BVLGARI IL CIOCCOLATO

Armani/Dolci

On the other hand, Nielsen did a global snacking survey to evaluate the current snack market. According to its report “Snack Attack: What Consumers Are Reaching for Around the World” (2014), snack sales in the past increased and grew quickly. Additionally, the survey showed that on a global average, most people reported they ate chocolate in the last 30 days (64%). In the Asia-Pacific region, most people had chosen chocolate as a snack in the last 30 days (69%). Chocolate is also the second largest snack that people ate within 30 days in North America (59%), Europe (61%), Latin America (64%), and the Middle East and Africa (51%). In other words, most people around the world often choose chocolate as their snack. The report supports the potential for business in the chocolate market.

Source: Nielsen Global Snacking Survey, Q1 2014

Besides, premium and dark chocolate are the strongest segments of the market in terms of growth in the United States. Unique products and consumption experiences are appealing to consumers. The article “U.S. Chocolate and Confectionery Market: Premium Segment to Drive the Market Expansion,” Sergeeva (2017) describes how ongoing economic and population growth are increasing the U.S. consumption of chocolate and confectionaries. The rise of consumer income will contribute to the growth of the chocolate market, especially in the premium segment. According to the article “Premium Chocolate Driving U.S. Sales Growth” (2016), premium chocolate is growing faster than sales of “everyday” chocolate in the overall U.S. chocolate market. Although everyday chocolate still dominated the overall market, accounting for 82% of industry sales, the sales growth has been steady or insignificant. On the contrary, premium chocolate presented a stronger growth rate of approximately 5% compared to 2015, and this upward growth for premium chocolate sales is expected to continue (Packaged Facts, 2016). This article illustrates how

chocolate can be seen as an “accessible luxury” for all ages, ethnicities and demographics, and that people are willing to pay for premium merchandise. The U.S. chocolate market is forecasted for sales growth through 2020 and beyond due to the innovation and a stable influx of new players and products, according to a report from Packaged Facts (2016), and premium is leading the way. David Sprinkle, research director for the Rockville, Maryland-based research company Packaged Facts believes that the premium segment thrives on dark chocolate, which is single origin and includes of healthy ingredients such as lavender and blueberry (2016). He says that major players in terms of premium chocolate including Godiva, Lindt, and Ghirardelli have added new flavors. For example, Lindt had a limited-time offer of pumpkin-spice Lindor truffles in fall 2016. Premium chocolate brands such as independent players La Maison du Chocolat and Vosges Chocolate are usually made with higher cacao content and include exotic flavors such as chili or ginger.

In the article “5 Marketing Tactics Helping Premium Chocolate Sale Outpace Overall Category,” Crawford (2014) illustrates how there are five factors driving sales of premium chocolate. The first is flavor innovation, such as a hint of alcohol and gourmet salt. “Flavors with an adult flair” are also popular innovations, according to George Puro, the author of the Packaged Facts report (2014). The second is health benefits. Some manufacturers of premium chocolate promote the heart and brain health and anti-inflammatory properties of dark chocolate to increase consumers’ interest. They are also adding healthy ingredients such as super seeds, including chia, hemp, and quinoa into chocolate to push the sales of premium chocolate (Crawford, 2014). The third sales driver is increased accessibility because the products are more readily available than before. Crawford (2014) explains that mass retailers prefer to stock premium chocolate in the candy aisle and attract consumers with everyday chocolate when they checkout. On the other hand, high-end retailers such as department stores and specialty retailers are more likely to place premium merchandise such as Godiva around the point of sale to create a higher-priced impulse purchase (Crawford, 2014).

The fourth sales driver is smaller portions for less because premium chocolate’s marketers are building brand loyalty and a preference for higher priced chocolate among young consumers with smaller incomes through selling less expensive products, according to Puro (2014). For example, Lindt sells Hello chocolate bars, which are smaller than traditional products, as a lower-priced entrylevel brand. The idea is that once customers are attached to Lindt Hello, they will pay more to buy the higher-priced premium Lindt chocolate when they have a higher income or their finances allow. Vosges used a similar method with its Wild Ophelia line-up. Compared to premium bars going for $6 or $7, those bars sell for around $3.49 because their function is to introduce the brand to consumers, especially those who usually shop at mass retailers instead of specialty stores (Crawford, 2014).

The Hunger Games Wild Ophelia Chocolate Bar Library, Vosges Haut-Chocolat Finally, the last sales driver, according to Puro (2014), is marketing indulgence, with marketing campaigns that position chocolate as a “self-reward.” He states that the idea behind these campaigns is “sometimes chocolate is a gift for someone else, but also it can be a gift for yourself.” This idea decreases the consumers’ guilt from the purchase (Crawford, 2014). Therefore, although inexpensive chocolate still drives the most sales in the U.S. chocolate market, high-end chocolate is becoming a leading trend in the chocolate business due to their marketing strategies and product positioning.

Overview of Premium Chocolate Brands There are several premium chocolate brands around the world nowadays. This project introduces five leading premium chocolate brands: Godiva, Lindt & Sprungli, Royce’, La Maison Du, and Vosges Haut-Chocolate with their products, price points and advertising strategies from the current mainstream market.

GODIVA

Godiva is known as a family business whose passion for top-quality chocolate began in 1926 in Brussels, Belgium. The brand’s name comes from a legendary character Lady Godiva, who presents the essence of the brand: solid principles, that never go out of fashion – boldness, generosity, leadership and courage. In 1946, Truffle Original chocolate was perfected by Pierre Draps Jr. This type of chocolate was not only iconic for Godiva but also for the entire chocolate industry. Godiva positioned itself as a premium global brand, with over 600 boutique stores and a presence in over 100 countries during the past 90 years due to its successful global travel retail outputs. According to the research, Godiva consumers are generally high income, Asian, and adolescent age (InfoScout, 2015). Most consumers are under 24 years old or over 65 years old. They usually have higher income which is $80k up and higher education level that holds Advanced Degree. Asian takes large part of Godiva consumers that presents the brand’s popularity for Asian consumers and tourists around the world.

On the matter of price point, Godiva products can be divided into prices under $25, prices from $25 to $50, prices from $50 to $100, and prices $100 and up, depending on different sizes, chocolate types, and packages. For example, an Assorted Chocolate Gold Gift Box, Classic Ribbon with 8 pc is $16 and an Assorted Chocolate Gold Gift Box, Chinese New Year Ribbon with 105 pc is $140. There are several ribbon color options such as two-toned pink, classic gold, congratulations, black, wine, Chinese New Year and gold pearl clusterâ&#x20AC;Śetc. based on customer preference. The chocolate types have four main categories, including dark chocolate, milk chocolate, white chocolate and assorted chocolates. On the website, Godiva provides detailed ingredients descriptions and nutritional information for each product so that consumers can choose their ideal chocolate flavor.

Furthermore, Godiva produces a variety of flavors including dark, milk, white, assorted, caramel, coffee, fruit, nut and spices. The brand also provides special features such as single source origin, kosher and bulk for specific requirements. Godivaâ&#x20AC;&#x2122;s signature chocolate is their Truffle collection, a combination of the classic dark, milk, or white chocolate shell with a delectable filling such as chocolate ganache. Chocolate truffles flavors will vary by the season. Godiva promotes its chocolate based on different consumers needs such as occasions, gift ideas, sweet treats, price, packaging, or even personalization service. Therefore, chocolate buyers can easily find and choose their ideal products or gifts when browsing Godivaâ&#x20AC;&#x2122;s website and retail stores. Godiva also operates several social media platforms to communicate with consumers, including Facebook, Twitter, Instagram, Pinterest, Google+ and YouTube. The interior design of their physical stores is elegant, bright, and spacious with wood floors and marble tables. Brown, white and gold are the three main colors. The store environment is comfortable for shopping and choosing chocolate.

Lindt & Sprungli: LINDOR

Founded in 1845, Lindt & Sprungli is the Premium Swiss Chocolate Leader. In 1879, famous c h o c o l a t e m a k e r R o d o l p h e L indt developed a technique to manufacture chocolate with superior aroma and melting characteristics. His "melting chocolate" soon became famous and contributed significantly to the worldwide reputation of Swiss chocolate. In 1949, Lindt's Master Chocolatiers introduced the iconic Lindor recipe. Unique shapes and flavors are the specialties of the brand. Today, Lindt & Sprungli is an international corporation sold in over 80 countries with eight production sites in Europe and the U.S. The company is continuing to roast its own cacao beans to produce

chocolate from bean to bar. Some wellknown varieties of Lindt & Sprungli chocolates include Lindor, Excellence, Gold Bunny, and Teddy Bear. Lindor consumers are generally women, of higher household incomes and higher education completion according to the research (Brachman et al., 2015). Most Lindor consumers are under 24 years old or over 45 years old. They usually have higher household income levels of $75k to $149k or $150k and up. Moreover, most of them have higher education levels and hold bachelorâ&#x20AC;&#x2122;s or advanced degrees. They can get higher-paying jobs and be able to spend more money on premium chocolate.

The prices of Lindor chocolates range from less than $5 to more than $50 depending on sizes, packages and ingredients. Most prices of Lindor gifts are from $10 to $25 or $25 to $50, which are well-received by the public. Lindor also provides a custom mix service for some products. Consumers can select their container and flavors to create their own assortment from more than 20 flavors including milk, dark, white, strawberries and cream, red velvet, valentine, sea salt, caramel, stracciatella, hazelnut, mint, fudge swirl, mangoes and cream, raspberry, coffee, orange, cappuccino, coconut, Irish cream, almond, dark gianduja, citrus, spring, pumpkin spice and gingerbread. Lindor chocolateâ&#x20AC;&#x2122;s most iconic product is Lindor Truffles, which is featured on luscious, flowing, and irresistibly smooth.

To m a k e L i n d o r c h o c o l a t e exceptional, the company endeavors to select the finest cocoa, use unique roasting and grinding and processes ingredients from world-renowned growing regions. For example, nuts are roasted in-house and freshly worked into the chocolate to maintain the best roasting aroma. On their website, Lindor provides detailed descriptions and nutritional information for consumers so that they can easily choose their ideal chocolate based on different occasions, chocolate categories and ingredients. Lindor also provides kosher chocolate and gluten-free chocolate for specific groups.

Compared to other chocolate brands, Lindor promotes its chocolate with more than 20 unique flavors and allows consumers to mix different flavors in one bag. Although Lindor doesnâ&#x20AC;&#x2122;t put too much effort into a wide variety of package design, its original package is distinctive enough and easily distributed from other brands. Lindor chocolate is also affordable for most people in the premium chocolate segment. On social media, Lindt chocolate operates four platforms to communicate with consumers including Facebook, Twitter, Instagram and Pinterest.

At the Lindt store, consumers are treated to premium free chocolate samples, and expert Lindt Chocolate Advisors will provide shopping assistance and tasting and pairing tips. The stores also host shopping events and offer promotions, sales and discounts on chocolates. The Lindt chocolate shopping experiences is â&#x20AC;&#x153;pause, indulge and enjoy.â&#x20AC;? Some Lindt Chocolate Shops provide additional chocolate experience features such as a mini cafe with hot and frozen Lindt chocolate beverages, or dipping stations and chocolate bark. The environment of the shop is spacious, bright, and clean with white floors. Brown and white are the two main colors, which makes customers feel warm and comfortable.

ROYCE’

Royce’ is a Japanese chocolate brand founded in 1983 in Sapporo, Hokkaido. Sapporo is the capital city of northernmost Japan and the ideal location for sourcing the freshest dairy products due to cold weather and wonderfully-suited terrain. Royce’ is well-known for manufacturing unique chocolate products such as nama, which means “fresh” in Japanese, matcha chocolates and potato chip chocolates that sold in over 14 countries. Today, Royce’ is working to introduce their unique Japanese-style chocolates in America. Royce’ consumers are generally middle income and 18-55 years old. Their general income is over $40k, except for students who earn far less but have a decent amount of disposable income. They usually have (or are getting) a college education or hold a master’s degree. On the price point, most Royce’ chocolates are from $15 to $25, but a few products are under $15 or above $50 depending on chocolate categories and sizes. For example, nama chocolate “White” is $18 per box, but a Royce’ collection “Blue” is $75.

Royce’ provides several chocolate types which differ from Western tastes, such as almond, cookie, marshmallow chocolate, nama chocolate, prafeuille chocolate, potato chip chocolate, pure chocolate, truffle, and wafers. Nama chocolate is one of the iconic products for Royce’ because its taste and production process are different from those of truffle chocolate. It was first introduced by Royce’ and tastes thick and creamy. On the website, consumers can see detailed ingredients and nutritional information for choosing their ideal products. Royce’ promotes its chocolate with special flavors such as alcohol and matcha. For example, nama chocolate’s “port chocolate” flavor includes

ingredients such as Barley whisky, the“strawberry champagne” flavor includes champagne and brandy and the “Kir Royal” flavor is a combination of swanky champagne and black raspberry cocktail. In addition, Royce’ also varies their chocolates’ textures, shapes and materials. Besides for pure chocolate, the brand also produces almond shape, baton cookie, chocolate wafers, popcorn chocolate and potato chip chocolate. To communicate with consumers, Royce’ operates three social media platforms: Facebook, Twitter and Instagram. Royce’ chocolate’s store is clean, bright, and spacious. White and brown are the two main colors, with white dominating. Each product looks neat and organized in the store.

LA MAISON DU

La Maison Du is one of the top French chocolate brands founded in 1977 by Robert Linxe in Paris. In 1978, Robert Linxe made his first ganaches with fruit, a technique involving blending chocolate and fresh cream. In 1995, he created his first Galette with chocolate ganache. In 2006, La Maison Du launched the legendary “Heart of Ganache Macarons” Collection. There are five flavors, all with chocolate ganache: plain chocolate, chocolate with raspberry, chocolate with vanilla, chocolate with coffee and chocolate with caramel. The signature taste of La Maison Du is to create a balance of the perfect proportion between the flavor (fruit, spice, infusion…) and chocolate. Robert Linxe said “Chocolate is the craft of an artisan. The chocolates are handmade, but in reality they are made with the heart.” The quote presents the essence of La Maison Du. They are not just making chocolate, they are making chocolate with their heart. Today, La Maison Du chocolate sells in eight countries around the world.

The price range of La Maison Du chocolate can be divided into prices under $30, prices between $30 and $50, prices between $50 and $100, prices between $100 and $200 and prices above $200, depending on different sizes and chocolate categories. Most products range from $30 to $100. The brand is well known for its iconic Gift Box, which is an orange box with a logo and a deep brown ribbon. Another famous La Maison Du product is their macarons. Each macaron is combined with a smooth, silky chocolate ganache and a variety of refined, gourmet flavors. For example, the Salvador flavor is chocolate ganache with raspberries, and the Maracuja flavor is chocolate ganache with passion fruit. On the website, each product has a detailed description, ingredient information, and the best way of tasting. La Maison Du will advise its consumers savor the chocolates in the suggested order to fully experience the aromas and flavors of its chocolates. Different products have different tasting rules. For example, if consumers are tasting several chocolates, it is best to start with a plain chocolate, then move on to flavored varieties: first those with fruits, then spices, then alcohol.

Source: La Maison Du official website, Initiation Gift Box 20 pieces

La Maison Du is also manufacturing different product categories such as

truffles, bars, glazed chestnuts, fruit pastes, chocolate covered fruits, macarons, and cakes. The brand promotes its gift options around two main holidays, Valentine’s Day and Chinese New Year, with special packaging. Furthermore, La Maison Du operates five social media platforms, Facebook, Twitter, Instagram, Pinterest and YouTube, to promote products and communicate with consumers. The website also provides a chocolate corporate catalog of new collections for consumers to download. The interior design of La Maison Du stores is elegant, bright, and spacious. The main colors are brown, orange, and white, following the company’s iconic Gift Box. Large windows easily attract consumers’ attention to the stores’ inside and efficiently display multiple products.

Vosges Haut-Chocolat

Vo s g e s H a u t - C h o c o l a t i s a Chicago-based chocolate brand that creates luxury chocolates of different varieties. This manufacturing company was founded in 1998 by chocolatier Katrina Markoff and currently has six retail stores in the United States. The purple house of Vosges Haut-Chocolat and the concept of “Travel the World through Chocolate” were inspired by Katrina’s journeys. She creates a sensory experience through her fusion of indigenous spices, flowers, roots, herbs and liqueurs with premium chocolate to cultivate awareness of and appreciation for the world’s various cultures. Vosges Haut-Chocolat was named one of the 10 Best Chocolatiers in the World by National Geographic. The brand continues putting efforts into expanding Katrina's mission of spreading Peace, Love, and Chocolate.

The price range of Vosges HautChocolat can be divided into $25 and under, $25 to $75, and over $75 according to different sizes, chocolate categories, and gift sets. Vosges HautChocolat provides a variety of gift ideas for consumers to choose from such as business gifts, gift sets of wine and chocolate, gift towers and party favors. The brand also features on unique flavors. For example, Exotic Truffle Collection includes the naga flavor which is a sweet Indian curry, and the Black Pearl flavor, which is ginger and wasabi mix. The innovative flavor is the icon of Vosges Haut-Chocolat and the founder’s aspiration of “Travel the World through Chocolate.” Consumers can experience various foreign cultures through tasting distinctive chocolate flavors.

On the website, Vosges Haut-Chocolat provides detailed ingredients, inspiration and product care. Katrina shares her dream of creating different chocolate types to communicate brand messages with consumers instead of only selling chocolate.

Source: Vosges Haut-Chocolat official website, Exotic Truffle Collection, 16 pieces

To remain at the pinnacle of the taste profile on her quest for ingredients, Katrina carefully selects the finest and most distinguished ingredients from around the world such as chipotle chile, ceremonial matcha, bronte pistachios, curry masala, bee pollen, and I.G.P piemonte hazelnuts. Vosges Haut-Chocolat also operates five social media platforms, Facebook, Twitter, Instagram, Pinterest and YouTube, to promote brand and products. Unlike most chocolate stores, which use brown, Vosges Haut-Chocolat uses purple for the main color on its packaging and physical storesâ&#x20AC;&#x2122; interior design. The stores of Vosges Haut-Chocolat are luxurious, elegant, bright and spacious. Purple and white are the two main colors. Purple walls especially make the stores look fashionable, gorgeous and distinctive.

Potential Manufacturers of the Premium Chocolate To develop a chocolate product line, it’s also important to be familiar with the leading manufacturers of premium chocolate. This project introduces three wellknown gourmet chocolate manufacturers: Valrhona, Scharffen Berger, and Michel Cluizel.

VALRHONA

Valrhona is a French chocolate manufacturer located in the small village of Tain L’Hermitage. The company was founded in 1922. It is one of the leading chocolate manufacturers in the world. The company has also maintained a pastry and chocolate school, L’École Valrhona, since 1989 for people to learn specific technical skills for chocolate-based dishes and pastries. In September 2014, L’École Valrhona opened its first U.S. chocolate school in Brooklyn, NY. Valrhona produces chocolate not only for professional but also for private use. The products include baking products, plain and flavored chocolate bars, and other chocolate snacks and treats. Valrhona is also one of the few companies that produce vintage chocolate made from beans of a single year's harvest from a specific plantation. The company has opened and operated its own plantations, first in the Venezuela, and more recently in the Dominican Republic to learn more about cocoa, oversee its quality, and guarantee its refinement.

SCHARFFEN BERGER

Scharffen Berger Chocolate Maker was founded in San Francisco by chocolate connoisseur Robert Steinberg and winemaker John Scharffenberger in 1997. The company was the first American “bean-to-bar” chocolate manufacturer, and the first chocolate maker to label its chocolate with the percentage of cacao inside. In 2005, the Hershey Company acquired Scharffen Berger, producing many positive results such as stronger buying power and enhanced funding for developing sustainable resources around the world. Today, Scharffen Berger Chocolate Maker continues to source and select the best beans from small sustainable farms in famous cacao-producing countries. Scharffen Berger chocolates are produced by a wine maker’s attention to craftsmanship, creating the richest, most flavorful chocolate. Consequently, the company is featured on various pairings to promote its unique chocolate flavors with other food and beverages such as beer, wine, coffee, liquor, nuts, fruits and cheese.

MICHEL CLUIZEL

Michel Cluizel is a French manufacturer of high-quality chocolate founded in 1948 in Damville, Normandy. The company is one of the leading chocolate revolutionaries in the world that produces a variety of high-quality chocolate products. All Michel Cluizelâ&#x20AC;&#x2122;s chocolate is soy free, produced by genuine bourbon vanilla bean, pure cocoa butter and no artificial flavorings. As of 1997, the company is also one of the few Cacaofeviers (processers of cocoa beans into chocolate) in the world. It has developed a direct and sustainable relations with five well-known planters to confirm/maintain the quality of their cocoa beans. Over the past 15 years, Michel Cluizel has been selling its chocolate from its stores in New York and New Jersey. The company produces handcrafted chocolates and non-dairy pastries from its USA manufacturing facility located in West Berlin, NJ. A chocolate museum was opened in the same place to provide unique tastings and a guided tour for the public. Michel Cluizel is also an environmentally friendly chocolatier. The company has invested $600,000 to improve the local sewage problem through building a new sewage treatment plant.

Consumer Analysis

For most luxury brands’ consumers, products found in stores lack appeal because they fail to stand out from the rest of the market. According to the article “More International Luxury Brands Break into the Chinese Restaurant Industry,” many consumers in China are willing to spend money on luxury brands’ food businesses. The article says that more and more luxury brands are engaging in the Chinese

the U.S. eat chocolate once a week or more. Furthermore, 32% of chocolate consumers buy more chocolate around holidays such as Easter, and one third of buyers (33%) buy more chocolate around the holidays to give as gifts. Apart from treating oneself or other people, mood enhancement is another popular reason Americans purchase chocolate (29%) and this rises to 41% among consumers 18-24 years old.

food industry, such as Louis Vuitton, Gucci, Prada and Hermes. Luxurybranded restaurants are appealing to the consumers due to their brand impact. Some consumers are big fans of a certain luxury brand, and many have faith in the quality of products produced by these luxury brands. Therefore, one marketing strategy is encouraging consumers to connect with a brand through promoting lifestyle improvements as part of products and services. This has become a common cross-border phenomenon for the luxury industry. On the other hand, chocolate consumers often consume chocolate as a treat. Unlike luxury consumption, people often purchase chocolate frequently. According to “Mintel’s Chocolate Confectionery – US, 2015 Report,” more than half (53%) of consumers in

In the article “Happiness Factors: Emotional Benefits Are Top Chocolate Sales Drivers, Says Mintel,” Douglas (2016) describes how chocolate has been associated with improved brain function, enhanced energy, and other health benefits. But confectioners can be better served through manipulating chocolate’s emotional connections, based on a report by Mintel. For most consumers, health consciousness is usually not the reason for eating chocolate. They eat chocolate because of the psychological wellbeing enjoyed when eating chocolate rather than for the food’s health and wellness properties, but this psychological pleasure can also be seen as a health positioning, according to Mintel’s director of insight, Marcia Mogelonsky (2016). She says that treating and

cravings are the top reasons for consuming chocolate. Although some consumers believe chocolate is healthy, they are in minority. Mogelonsky (2016) also illustrates how chocolate marketing could benefit from emphasizing chocolateâ&#x20AC;&#x2122;s emotional power instead of functionality because most chocolate eaters agree that chocolate can provide them emotional satisfaction. There is another online survey that shows 45% of consumers eat chocolate because it makes them happy, 43% said they eat chocolate because it tastes good, 35% found it comforting and 34% said it calms them and is a stress reliever (Crawford, 2015).

On the subject of chocolate preference, most chocolate buyers (71%) are looking for options with mix-ins instead of plain/unflavored varieties, while nuts and nut flavors are on the rise (Mintel, 2015). According to the statistic â&#x20AC;&#x153;Share of Consumers Worldwide Who Prefer Chocolate with Nut Inclusionsâ&#x20AC;? (Statista, 2016), 70% of global respondents reported preferring chocolate with nuts, in large part because the nuts make confection more nutritious and taste crunchier. Besides nuts, dried fruit inclusions are also popular. A survey conducted by the Almond Board of California (2015), found that around 20% of respondents said their last chocolate experience was milk chocolate with fruit pieces, 17% said dark chocolate with fruit pieces and 10% said white chocolate with fruit pieces. Other popular fruit inclusions include raisins, which 24% of respondents said would be in their ideal chocolate. Another 24% favored coconut and 24% reported strawberry, according to the survey. Other popular fruit inclusions from the surveyâ&#x20AC;&#x2122;s respondents included apricots, blueberries, cherries, raspberries, peaches, mangos and goji berries, according to Peggy Fyffe, the director of trade stewardship at the Almond Board of California (2015).

Source: Share of consumers worldwide who prefer chocolate with nut inclusions as of July 2016, Statista

Wi t h t h e g r o w t h o f h e a l t h consciousness, consumer taste preferences shift to organic, lowcalorie and low-sugar products. This has encouraged manufactures to develop sugar-free chocolates and candies (Sergeeva, 2017). They are also developing new flavors, especially non-traditional flavors, to increase consumersâ&#x20AC;&#x2122; interest in a highlycompetitive market. The Mintel report (2016) states that chocolate buyers are looking for new and innovative flavors. According to the report, 21% of chocolate candy buyers in the U.S. say they usually purchase new types of the snack when they see them (Mintel, 2016).

Although mood enhancement is the main driver of chocolate consumption, the health factor is still influential for Millennial buyers (Mintel, 2016). The report speculates that this group is more likely to say premium chocolate is healthier than standard and say they are willing to spend more money on healthier chocolate compared to any other generation. Therefore, if Tiffany & Co. wants to develop its brand extension in the premium chocolate business, it may be a chance for the brand to break into a new industry to attract more customers. However, the company must to consider current consumerâ&#x20AC;&#x2122;s preferences in the chocolate market first.

PRIMARY RESEARCH

Research Design To understand customers’ chocolate preferences and their reasons for purchasing chocolate, the project needs to conduct primary research. The primary research will be qualitative research, and the research method will be phone interviews. It is important to obtain more in-depth information about the target customers of Tiffany chocolate. There are four main interview directions for the project: 1) consumers’ aspiration to purchase chocolate, 2) consumers’ chocolate consumption behavior and habits, 3) consumers’ chocolate preferences, and 4) consumers’ attitudes about Tiffany’s chocolate extension. The project will find 10 interviewees to be a focus groups and conduct in-depth interviews. Their responses will be critical for understanding customers’ preferences on chocolate products and their attitudes toward Tiffany’s chocolate extension, so that suitable marketing strategies for the project can be developed.

Potential Customers

It is important to clarify who are the target customers of Tiffany’s chocolate because the information can help this project to find potential customers for primary research to do an effective interview. The potential customers can be identified by demographic and psychographic elements. The demographic can be divided to gender, age, general income and region. The psychographic element is analyzing what kind of people will be potential customers of Tiffany’s chocolate due to their psychologic factors such as enjoyable experience or self-satisfaction.

Demographic • Gender: both male and female • Age: 25 – 40 years old • Income: middle to higher income • Region: United States, especially New York City

Psychographic

• Enjoys high quality pastry or food experience • Social media user and often follows new information • Interested in popular trends and willing to try new things • Willing to share and express love with lovers, family or friends • Willing to spend money on chocolate and purchase it as gifts

Both men and women can be potential customers because chocolate can be a gift for either gender. Their age should between 25 to 40 years old because Tiffany’s chocolate will be promoted to younger customers, especially Millennials. In addition, they should live in the United States currently, especially New York City because Tiffany’s chocolate store plans to start at the Tiffany New York flagship store on Fifth Avenue. It is important to research more information from consumers who live in New York. On the psychographic factors, the target customers do not have to be chocoholics, but they should be willing to spend money on chocolate or purchase it as gifts for other people. They enjoy high quality food experiences and consider food a worthwhile commodity to expend money on. They are also social media users because most young customers often use social media such as Facebook, Twitter and Instagram. They are followers of popular information and willing to try new things. In addition, they are willing to spend money on chocolate or purchase chocolate as gift for their lovers, friends, family or even colleagues to express their formalities or appreciation.

Profile of Interviewees According to the potential customer analysis, the researcher started searching for suitable potential customers for the project to do primary research. There are 10 interviewees, and all of them are fond of chocolate. Most of them are currently working in the New York. Their ages (mostly) range from 25 to 35 years old. Their occupations vary because chocolate buyers are extremely broad category. Anyone can be a chocolate buyer, especially in New York. There are many people from different countries and professions. Therefore, these 10 interviews are all from different careers. Most of them hold a masterâ&#x20AC;&#x2122;s degree. They have a higher education level and stable income. Below is the profile of the 10 interviewees:

Interview Questions According to the research design, the interview has four directions: 1) consumers’ aspiration to purchase chocolate, 2) consumers’ chocolate consumption behavior and habits, 3) consumers’ chocolate preferences, and 4) consumers’ attitudes about Tiffany’s chocolate extension. Based on these factors, there are a few main questions for the interviewees: 1. What is your primary reason for purchasing chocolate? 2. Where do you usually buy chocolate? (location) 3. Do you usually buy “high-end” or “inexpensive” chocolate? 4. How often do you buy chocolate? For yourself or for other people? 5. What kind of chocolate do you prefer (flavor, taste, sweetness, shape, ingredients, health…)? 6. What factors affect your choice of chocolate (brand, price, package…)? 7. How much you are willing to pay for chocolate? (price limit) 8. What chocolate brands do you prefer to buy or usually buy (Godiva, Lindt, Royce…)? Why? 9. If the jewelry company Tiffany & Co. sold chocolates, would you want to buy them? Why or why not? 10. What kind of suggestions you would give Tiffany if they sold chocolate products?

Results Analysis of Interview 1. Consumers’ Aspiration to Purchase Chocolate

For the first question “What is your primary reason for purchasing chocolate?” the interviewees’ reasons can be divided to two main categories: personal consumption and as a gift option. All interviewees mentioned that they bought chocolate because they just wanted to eat, but there were four people who said they ate chocolate occasionally and when they wanted to try something new or they had strong desire to eat chocolate. However, all respondents also mentioned that they had purchased chocolate as gifts before because they considered chocolate an ideal choice of gift for friends, family, partners, colleagues or clients. One interviewee said she usually prepared chocolates at home for her friends when they visited her, and another person said she would buy chocolate if she was preparing to meet someone for the first time.

2. Consumers’ Chocolate Consumption Behavior and Habits

With the second question “Where do you usually buy chocolate?” eight interviewees said they usually went to independent chocolate stores. However, it also depended on the purpose. Some of them said if they just bought chocolate for themselves, they would go to supermarkets such as Target or pharmacies such as CVS and Walgreens because it was cheaper and more convenient. If they wanted to buy it as a gift, they would go to independent stores, department stores or special candy stores such as Lollipop Shop.

On the third question “Do you usually buy “high-end” or “inexpensive” chocolate?” half of the interviewees responded with inexpensive chocolate because they usually bought chocolate for themselves, and they ate inexpensive chocolate such as KitKat, Reese’s, Hershey’s Kisses and Toblerone more than high-end chocolate. However, half of the interviewees emphasized that they usually bought premium chocolate because they wanted to enjoy chocolate with higher quality and better taste. They believed that premium chocolates meant higher quality, and their ingredients were more reliable. They mentioned that they might not eat chocolate frequently, but they were willing to spend more money on premium chocolate because they ate less chocolate. Quality was more important than quantity for them. Additionally, most interviewees said their choice would depend on recipients. Eight interviewees said they usually bought high-end chocolate for others more than for themselves, only two people said they often bought inexpensive chocolate for others.

On the fourth question â&#x20AC;&#x153;How often do you buy chocolate? For yourself or for other people?â&#x20AC;? different interviewees had different answers. There were four people who said they usually bought chocolate once every three months. One interviewee said she would buy chocolate once each month, and two interviewees said they would buy chocolate once every two weeks. Most interviewees mentioned that they often bought a few chocolate products when they passed by the store. There were six interviewees who said they usually bought chocolate for themselves, two said half and half, and two said they usually bought for other people. Thus, most people usually bought chocolate due to personal desire.

On the seventh question â&#x20AC;&#x153;How much you are willing to pay for chocolate?â&#x20AC;? there were two interviewees who said $25, one said $30, three said $50, three said $100 and one said $150. The price range was extremely wide because they mentioned that it depended on who was receiving the gift. One interviewee said he would be willing to pay more for chocolate for family and a girlfriend. In fact, most people said they would be willing to pay more to purchase chocolate as gifts because it was meaningful.

3. Consumersâ&#x20AC;&#x2122; Chocolate Preferences

For the fifth question â&#x20AC;&#x153;What kind of chocolate do you prefer?â&#x20AC;? there were seven interviewees who mentioned that they prefer dark chocolate, especially above 70% cacao. Most respondents said they preferred less sweet chocolate, and there were only two people who said they preferred sweet chocolate. Half the interviewees who said they preferred chocolate with additional inclusions such peanut, hazelnut, cocoa beans, and fruit.

On the sixth question â&#x20AC;&#x153;What factors affect your choice of chocolate?â&#x20AC;? six interviewees agreed that brand would influence their choices because they usually bought chocolate with a higher reputation. There were four people who said occasion and packaging would influence their choices because they would choose different chocolate for different people, holidays or purposes. Besides that, there were five interviewees who mentioned that price would influence their choices and four people said taste. There were some other influential factors including ingredients, exclusivity, and manufacturer.

On the eighth question “What chocolate brands do you prefer to buy or usually buy? Why?” half interviewees mentioned Godiva because it was famous for chocolate products, and they considered Godiva a good choice as a gift due to its quality, package and reputation. Four interviewees said Royce because it tasted good and had unique flavors such as matcha and alcohol. There were some other brands mentioned including Ghirardelli, Lindt, See’s Candy, Valrhona, Vosges, La Maison Du, Kit Kat, and Ferrero Rocher. Two interviewees said they didn’t limit themselves to specific brand because they would buy whatever they liked.

4. Consumers’ Attitudes About Tiffany’s Chocolate Extension

For the ninth question “If the jewelry company Tiffany & Co. sold chocolates, would you want to buy them? Why or why not?” only one interviewee said that he would not buy the chocolate because he viewed Tiffany as a brand that was too commercial and mainstream. He mentioned that Tiffany was famous for jewelry, not chocolate, so he would prefer to buy other premium chocolate brands because they were experts at making chocolate. However, most interviewees said they would willing to try it. If Tiffany’s chocolate tasted good and looked attractive, they might purchase it because they were curious about what Tiffany’s chocolate would be like, and they trusted the brand’s high quality due to its reputation.

On the last question “What kind of suggestions you would give Tiffany if they sold chocolate products?” there were many different responses. Most interviewees mentioned that the taste must be great, but they didn’t worry too much about it because they believed Tiffany would maintain a quality standard equal to that of their jewelry. One interviewee suggested that Tiffany could promote the chocolate with combination of accessories. Another interviewee said she didn’t want all the chocolate to have the iconic blue because it was too common. One interviewee suggested that Tiffany could make packaging simple and elegant instead of over-packaging like with its jewelry. In addition, there were two interviewees who mentioned that they wanted to see an exclusive product, with a design that was different from other chocolate brands.

KEY FINDINGS

Key Findings for Secondary Research 1. The jewelry industry is facing a decline of sales and few shoppers go into Tiffanyâ&#x20AC;&#x2122;s store because of the decrease in marriage rates and the lack of purchases from Millennials. 2. Jewelry sellers have lost emotional connections with their customers. 3. The United States is the worldâ&#x20AC;&#x2122;s largest chocolate market. 4. Bvlgari provides personalized chocolate for both the groom and bride for their wedding day. 5. Bvlgari attracts Japanese consumers through seasonal and local flavors. 6. Premium and dark chocolate are the strongest segments of the market in terms of growth in the U.S. due to unique product and consumption experiences. 7. Ongoing economic growth and the rise of consumer income will contribute to the chocolate market. 8. Premium chocolate can become an accessible luxury for all ages, ethnicities, and demographics. 9. Innovation, new players and products contribute to the growth of the U.S. chocolate market, especially the premium segment. 10. The premium segment thrives on dark chocolate because it is single origins and because of healthy ingredients combined such as fruit. 11. There are many brands in terms of premium chocolate including Godiva, Lindt and Royceâ&#x20AC;&#x2122;, and independent players such as La Maison Du and Vosges HautChocolate. 12. Facebook, Twitter, and Instagram are three main social media platforms used premium chocolate brands. 13. Three large-scale manufacturers of premium chocolate are Valrhona, Scharffen Berger, and Michel Cluizel. Valrhona and Michel Cluizel are French companies, and Scharffen Berger is an American company. 14. Premium chocolate usually made with higher cacao content and exotic flavors. 15. Five selling points of premium chocolate are the following: 1) Flavor innovation, 2) Health benefits, 3) Increased accessibility, 4) Smaller inexpensive products, and 5) Marketing positions such as self-reward. 16. Holidays and mood enhancement are both popular reasons for Americans to purchase chocolate.

17. It is more beneficial for confectioners to emphasize emotional benefits of chocolate consumption because most chocolate eaters agree that chocolate can provide them emotional satisfaction. 18. Nuts and fruit inclusions are becoming popular. 19. Health consciousness and innovative flavors are influential in the chocolate market.

Key Findings for Primary Research 1. Consumersâ&#x20AC;&#x2122; rational for purchasing chocolate can be divided to two main factors: personal consumption and as a gift option. 2. Most interviewees usually purchased chocolate at independent stores, but the purchases can depend on the purpose of consumption. 3. Half of the interviewees said they often purchased inexpensive chocolate because they ate inexpensive chocolate more than high-end chocolate. 4. Half of the interviewees emphasized that they usually bought premium chocolate because they either were willing to pay more for higher quality and a premium taste experience, or they wanted to buy it as gifts. Quality was more important than quantity for them. 5. Depending on recipients, eight interviewees said they usually bought high-end chocolate for others more than for themselves. 6. Most interviewees usually bought chocolate once every three months. 7. Most interviewees usually bought chocolate for personal consumption. 8. Depending on recipients, the price range that interviewees were willing to pay was in between $50-$100. 9. Most interviewees preferred less-sweet chocolate such as dark chocolate, especially over 70% cacao. 10. Half of the interviewees preferred chocolate with additional inclusions such peanut, hazelnut, cocoa beans, or fruit. 11. Six interviewees agreed that brand would influence their choices of chocolate because they usually bought chocolate associated with a higher-reputation brand. 12. Half of the interviewees agreed that price would influence their choices of chocolate because different people have different price limits and considerations.

13. Four interviewees mentioned that occasion and packaging would influence their choices of chocolate because they chose different chocolate for different people, holidays, or purposes. 14. Four interviewees said taste would also influence their choice of chocolate. 15. Half of the interviewees preferred to buy Godiva because it was famous for its chocolate products, and they considered that Godiva was a good choice as a gift due to its taste quality, beautiful packaging, and high reputation. 16. Most interviewees were willing to buy Tiffany’s chocolate. If it tasted good and looked attractive, they might purchase it. 17. The taste would be the most important concern for Tiffany’s chocolate.

Key Findings Analysis According to the key findings from both secondary research and primary research, this project found the chocolate market in the U.S. has strong potential for business due to the growth of the economy and the rise of consumer income. In addition, premium chocolate is growing faster than everyday chocolate because consumers are starting looking for unique products and better consumption experience. There are five sales drivers of premium chocolate: innovative flavors, health benefits, increased accessibility, smaller inexpensive products and marketing position. Many premium chocolate brands are creating a variety of new flavors such as alcohol and spices to increase consumers’ interest. The rise of health consciousness makes consumers more concerned about chocolate’s

ingredients and quality. Compared to the past, premium chocolates are easier to purchase than before from various channels such as chocolate independent stores, department stores, special candy shops and online stores. Consumers can purchase numerous chocolates from different countries easily. Most premium chocolate brands also provide some less-expensive chocolate products to build consumers loyalty and brand image. When brand preferences are in place, consumers will prefer to buy those specific brands more than others. Furthermore, premium chocolate usually positions itself as special gifts not only for others but also for yourself.

Premium chocolate can be viewed as an accessible luxury because it is expensive but still more affordable if purchased in small pieces of highend chocolate. It can be enjoyed by all ages, genders, ethnicities, and demographics. Therefore, chocolate buyers are often tourists because premium chocolate can be a sure-fire gift for anyone. Even if some recipients are not fond of chocolate, they can easily share chocolate or give to other people. Besides, holidays and mood enhancement are two main reasons for Americans to purchase chocolate. Some popular holidays for chocolate consumption are Valentineâ&#x20AC;&#x2122;s Day, Easter, Thanksgiving, and Christmas. Most chocolate eaters agree that chocolate can provide them emotional satisfaction. Therefore, chocolate can make people feel happy and satisfied, and even help people release their stress. Combined with primary research, personal consumption and gift giving are two main reasons for consumers to purchase chocolate. People will buy chocolate when they want to eat or want to send it to other people as gifts. Dark chocolate is becoming mainstream compared to the sweeter chocolates such as milk chocolate or white chocolate because more and more consumers prefer less sweet and more pure chocolate flavors.

Additional ingredients such as nuts and real fruits are also popular flavors. Although people usually buy inexpensive chocolate more than highend chocolate in their daily lives, they are willing to spend more money on premium chocolate as gifts for various occasions because gifts represent their emotion and feeling. The recipients and occasions are usually important and often influence their choice of chocolate. Most people will purchase chocolate with a higher reputation because they believe that famous brands reflect high quality and make a convenient gift option. Interestingly, a high income level does not mean that people are willing to spend money on purchasing premium chocolate. It really depends on different peopleâ&#x20AC;&#x2122;s requirements. Therefore, price is still an influencing factor because each person has their own price limit and considerations for chocolate. Some people only want to enjoy high quality chocolate and they are willing to pay more for high-end chocolate although they do not have a high income level. Some people have a lower price limit for chocolate because they donâ&#x20AC;&#x2122;t think chocolate is worth the money even though their income level is higher. However, premium chocolate buyers are usually middle to high income levels, so they can afford to buy it.

PROJECT STRATEGY

According to the key findings from secondary research and primary research, the six segments discussed in this chapter are target customer, placement and environment, products, pricing strategy, customer service and promotion strategies. The target customer will help Tiffany & Co. clarify and define the potential customers of Tiffany Chocolate. Store location and merchandise display will also be crucial for customers. The products focus on what kinds of chocolate will be sold by Tiffany & Co. and identify the chocolate’s price point. Tiffany Chocolate will also provide different services for the customers. Finally, the project will help Tiffany & Co. to promote its chocolate products with several strategies.

Mission and Values To improve Tiffany & Co.’s current declining sales due to the decrease of marriage rates and less consumption from Millennials, this project develops a new product line called “Tiffany Chocolate” for Tiffany & Co. to rebuild a new connection between younger consumers and the company.

Mission

Tiffany & Co. creates a delicious, high quality taste experience for you. Tiffany Chocolate provides customers the elegant indulgence not only for yourself but for people you love.

Values

Tiffany Chocolate produces its chocolate through cooperation with well-known chocolate manufacturer Michel Cluizel to create exclusive design and excellent taste. The process of chocolate manufacturing is similar to the process of producing a Tiffany diamond. It follows Tiffany’s quality standards to ensure the quality of Tiffany Chocolate.

“Each Tiffany Chocolate is an exclusive and timeless reflection of one’s soul and heart.” - Tiffany Chocolate

USP

The unique selling proposition of Tiffany Chocolate will be a premium chocolate made by a historical luxury jewelry brand. Tiffany Chocolate will create a new emotional connection with customers to communicate the message “chocolate is a gift to express love.” When people enjoy a piece of Tiffany Chocolate, they share a piece of happiness and love.

Logo

The Tiffany Chocolate’s logo draws its original design from Tiffany & Co., which is simple, clear, elegant and distinctive.

SWOT Analysis

According to the SWOT analysis, Tiffany Chocolate has significant strengths due to high reputation and brand awareness from Tiffany & Co. Tiffany Chocolate can attract not only established customers, but also new potential customers who would buy chocolate. Compared to jewelry or accessories, chocolate products provide a more affordable price for the general customers and further advertises Tiffanyâ&#x20AC;&#x2122;s brand. Not many luxury brands have expanded to the chocolate market, which provides an opportunity for Tiffany & Co. However, Tiffany & Co. is famous for jewelry rather than chocolate. The company lacks chocolate business experience and awareness in the chocolate market. The premium chocolate market is highly competitive, and there are many direct competitors from current premium chocolatiers such as Godiva, Lindt, and La Maison Du. New players from luxury brands such as Armani/Dolci will also be the indirect competitors.

Target Customer According to the primary research, the target customer of Tiffany Chocolate chooses their ideal chocolate based on high quality and outstanding taste. They usually have middle to higher income levels and are able to purchase high-end chocolate. They may not buy chocolate frequently or in huge amounts, but they want to enjoy high quality chocolate from reliable, famous chocolate brands. In addition, they usually buy chocolate at independent stores or department stores. They have a clear idea of what kinds of chocolate they would enjoy and purchase. They don’t spend much time browsing different brands or comparing prices. They also care about exclusivity because they are looking for innovative and creative products instead of common chocolate that everyone would purchase.

Demographic • Gender: both males and females can be Tiffany Chocolate customers • Age: 25 – 40 years old, to attract more younger customers • Income: middle to higher income, $60k/year to $100k up/year • Region: United States, especially New York City due to higher income levels and large numbers of tourists from different countries

Psychographic • Enjoys high quality food or chocolate experience • Social media user and often follows new information from media or friends • Interested in new trends and willing to try new things such as unique flavors • Willing to share and express appreciation with lovers, family, friends or colleagues • Willing to spend money on premium chocolate and purchase it as a gift

Persona

Jessica currently lives and works in Manhattan. She is 28 years old, and her income is $75,000 per year. She doesnâ&#x20AC;&#x2122;t eat chocolate all the time, but she enjoys spending a little more money on premium chocolate when she wants to eat something sweet or is stressed. Enjoying a box of high quality chocolate makes her happy, and it is an ideal gift for herself and friends. She often uses social media such as Instagram to follow new trends and friendsâ&#x20AC;&#x2122; daily lives.

Placement and Environment Tiffany Chocolate will start selling at Tiffany’s New York flagship store because Tiffany & Co. was founded in New York City in 1837, and the Blue Box Cafe opened at the New York flagship store recently in 2017. The cafe is Tiffany’s first food extension. Tiffany Chocolate will be displayed on the same floor as the Blue Box Cafe because it is an environment providing a high-end food experience and Tiffany’s tableware. For this reason, the space for Tiffany Chocolate will be designed close to the Blue Box Cafe to increase customers’ desire for consumption. While customers wait for their brunch or afternoon tea, they can come to look at the window display of chocolate or buy a piece of chocolate when they leave. A clean, bright and wide space is also a basic element for a premium chocolate store.

This space will be redesigned for Tiffany Chocolate, and there will be a smaller window display in the center that replaces the wood box with the chocolate.

The window display for chocolate will be similar to the jewelry display to show that Tiffany Chocolate is the other form of jewelry.

In addition, the Tiffany New York flagship store is located on 5th Avenue in midtown Manhattan, and there are several premium chocolate stores around this location such as Godiva, Lindt, Royce’ and La Maison Du. In other words, this area will attract many potential chocolate customers, tourists and luxury customers. Tiffany Chocolate will focus on 70% in-store and 30% online sales because most people prefer going to independent chocolate stores directly based on the primary research’s key findings. However, an online shopping service will be also available for customers who know exactly what they want from Tiffany Chocolate and increase shopping convenience for people who live in different cities.

Products According to the secondary and primary research, dark chocolate drives the premium segment. Besides dark chocolate, Tiffany Chocolate will also sell two other categories: truffles and white chocolate. Most premium chocolate brands produce dark chocolate and a truffle collection. Dark chocolate is a popular item for both customers and chocolatiers, but truffles and white chocolate are also common products among premium chocolate brands. Although white chocolate is not as popular as milk chocolate and the other two segments, it can provide a variety of flavors with fruit inclusions to create an exclusivity for customers who prefer a sweeter taste. White is also an iconic color for Tiffany & Co. due to the white ribbon and bowknot of the Tiffany Blue Box. The chocolate’s appearance will be inspired from the brand’s features such as Tiffany blue, jewelry and simple and elegant. These elements are important for creating unique Tiffany Chocolate.

Assortment of Tiffany Chocolate

Dark Chocolate Dark Chocolate will focus on pure chocolate, no additional inclusions, standard size for customers who only want to taste the original cacao flavor.

Truffles Truffles will produce another tasting experience through their round shape, different ingredients and production process and nuts or almond covering on some.

White Chocolate White Chocolate will provide a sweeter taste and balance some additional ingredients such as fruits to create different appearances and flavors.

Manufacturer In addition, the chocolate production will cooperate with premium chocolate manufacturer Michel Cluizel to produce Tiffany Chocolate. Michel Cluizel is a French chocolate maker with over 70 years of history. The chocolate company also puts an effort into sustainable development. Their company values are the same as those of Tiffany & Co. It will benefit the company to use a manufacturer that shares the same values and willingness to promote environmental concerns. Also, all Michel Cluizelâ&#x20AC;&#x2122;s chocolate is made without soy and without any artificial flavorings to ensure the chocolateâ&#x20AC;&#x2122;s pure ingredients and high quality. Although Michel Cluizel is a French company, it operates two physical stores in New York City that manufacture and sell its products directly. The companyâ&#x20AC;&#x2122;s USA manufacturing facility is located in West Berlin, NJ, which is close to New York City, and produces handcrafted chocolates for the stores. This benefit can ensure that Tiffany Chocolate provides the freshest chocolate for the customers.

Packaging The packaging will keep the iconic Tiffany Blue Box and will be available in two sizes: four pieces and nine pieces. If customers just want to eat by themselves, they can choose a simple gift box without a ribbon. If they want to buy chocolate as a gift, they can ask for a formal gift box with beautiful packaging. The ribbon will be brown instead of white to represent chocolate. Customers can therefore easily distinguish the Tiffany Chocolate box from the original jewelry box. When customers purchase chocolate, there are several options depending on their preferences. Each box has four choices: all dark chocolate, all truffles, all white chocolate or a mix. The mixed one will include three chocolate types, so customers can enjoy each type of chocolate.

Nine-piece box with ribbon. Tiffany Chocolate will use a brown ribbon instead of the white ribbon.

Shopping bag for Tiffany Chocolate

Pricing Strategy

According to the price range of competitors, Tiffany Chocolate price will be located between premium chocolate brands and luxury chocolate brands. Most premium chocolate is sold with a box, and Tiffany Chocolate will follow this method and focus on selling by per box. Customers can choose their ideal chocolate individually and mix them in one box. They won’t be forced to buy a whole box of chocolate, which usually contains several flavors. With most leading premium chocolate brands, one box with six pieces usually sells for $17. Armani’s chocolate Armani/Dolci is available for one box with four pieces and sells for €14,50 ($18.07). According to these two price points, the four pieces of Tiffany Chocolate will be $18 per box for all-dark, all-white and mixed boxes. Truffles will be a little bit higher due to their different production processes; the four pieces will be $20 per box for all truffles. The four pieces of mixed chocolate include two dark, one truffle and one white. The nine pieces of Tiffany Chocolate will be $28 per box for all-dark, allwhite and mixed boxes. Truffles will be $30 per box for all truffles. The nine pieces of mixed chocolate includes three dark, three truffles, and three white. However, if customers don’t want to buy per box, they can purchase chocolate individually.

*Individual Price: Dark and White $4/piece, Truffle $5.50/piece

Services Retail Services Tiffany Chocolate will provide several types of customer service at physical stores and online. There will be free tastings in the physical store. Customers can taste a few pieces of each flavor before they make a purchasing decision. In addition, customers can ask for beautiful packaging. If they want to buy chocolate as a gift, the staff will provide free packaging similar to Tiffany’s iconic Blue Box. If customers do not like over-packaging, they can choose the simple box without any decoration. To maintain the chocolate’s fresh quality, the staff will put a small ice pack with the box to prevent the chocolate’s melting due to high temperatures. Additionally, Tiffany Chocolate Consultant will provide shopping assistance and tasting and pairing tips for customers in the store.

Online Services Tiffany Chocolate will also sell on Tiffany’s online shop for customers who are not in New York City. Customers can order on the website and pay a small shipment fee, and the chocolate will ship directly to their chosen location. If they are in New York City, they can pick up orders in-store for free. Tiffany Chocolate also offers same-day delivery in many areas of Manhattan, and the shipment fees will depend on location. If a customer orders before 1:00 pm, the products will be delivered before 5:30 pm. The online store will provide a question form for customers to submit any questions for Tiffany Chocolate, or they can contact the store by phone and email.

Free Tasting

Free Packaging

Small Ice Pack

Chocolate Consultant

Online Order

Free Pick Up In-Store

Same Day Delivery

Customer Service

Promotion Strategies The purpose of promotion strategies is to promote Tiffany Chocolate products and increase customersâ&#x20AC;&#x2122; brand awareness. The promotion strategies will include digital media, print media, an opening event, gift sets for different occasions, seasonal flavors, a chocolate catalogue and gift card, window display and chocolate tasting class for customers.

Digital Media According to the secondary research, all leading premium chocolate brands operate social media platforms, especially Instagram, Facebook and Twitter. Pinterest and YouTube are also popular. Fortunately, Tiffany & Co. operates eight social media channels, including Instagram, Facebook, Twitter, Pinterest, YouTube, Google+ and Snapchat. The Millennial generation is also the main user of social media. Young customers use social media everywhere, all the time. Therefore, Tiffany Chocolate will concentrate on five social media platforms including Instagram, Facebook, Twitter, Pinterest, YouTube and Tiffany & Co. official website to promote chocolate products and print advertising to catch customersâ&#x20AC;&#x2122; attention.

Tiffany & Co. Facebook fan page for Tiffany Chocolate promotion

Tiffany & Co. Instagram post for Tiffany Chocolate promotion

Tiffany & Co. official website for Tiffany Chocolate promotion

Print Media Print advertisement is also an important strategy because it can help Tiffany Chocolate to approach a broader range of target customers who concentrate on fashion trends or chocolate information. This project will select two magazines for full-page ads. One is the fashion magazine VOGUE and the other is the chocolate magazine Chocolate Connoisseur. VOGUE can attract customers who are fond of fashion, Tiffany & Co. or other luxury brands and new information in the fashion industry. Chocolate Connoisseur is a magazine that helps chocolate lovers to expand knowledge, deepen connections and enhance passion for the world of high quality chocolate. It can attract the potential chocolate customers. Therefore, this project will plan to buy full-page ads to pre-launch and launch Tiffany Chocolate on VOGUE and Chocolate Connoisseur magazine.

Full-page ad on magazine for Tiffany Chocolate promotion

Opening Event Additionally, there will be an opening event for Tiffany Chocolate in the storeâ&#x20AC;&#x2122;s first month of operation. The event will invite media reporters such as famous magazine VOGUE or ELLE and young celebrities such as Elle Fanning for a tasting party on the first day. To encourage people to purchase chocolate for their partners, family or friends to express appreciation and love, Tiffany Chocolate will provide a free note card for customers to write a message on and put in the bag with the chocolate. During the opening event, each Blue Box Cafe customer will receive a piece of chocolate for free, and Tiffany chocolate will also offer free shipment at the online store for all customers within the USA.

Free note card for customers during opening event

Free chocolate for Blue Box Cafe customers

Occasions’ Gift Sets Different occasions will provide special gift sets including Valentine’s Day, engagement, wedding, birthday, business gift, Thank You gift, Thanksgiving and Christmas. For example, Tiffany & Co. will provide a gift set combining an accessory such as a necklace and chocolate on Valentine’s Day; the recipients can receive a beautiful Tiffany accessory and enjoy pieces of delicious chocolate. For a wedding, Tiffany Chocolate can provide personalized chocolate for both the groom and bride.

Seasonal Flavors Furthermore, Tiffany Chocolate will change seasonal flavors to maintain exclusivity and freshness for the customers. Customers won’t eat the same flavors for the whole year. For example, there are three flavors, strawberry, blueberry and mint, available now. Tiffany Chocolate may produce different flavors such as peach, pistachio, and mango after three months.

Seasonal flavors for Tiffany Chocolate

Chocolate Catalogue Tiffany & Co. promotes its jewelry and accessories with the different Tiffany catalogues. For some premium chocolate brands, they also do catalogues for seasonal chocolate collections. Therefore, Tiffany Chocolate can create a chocolate catalogue for the customers to look at. Beautiful catalogues are not only for jewelry but for chocolate as well.

Gift Card Although Tiffany & Co. already has a gift card, Tiffany Chocolate will provide its own gift card to encourage customers to purchase chocolate or give this gift card as a gift for their partners, family members, or friends to purchase Tiffany Chocolate.

Gift Card, the white ribbon will be replaced by brown ribbon to represent Tiffany Chocolate.

Window Display Window display for Tiffany Chocolate will be installed on the first floor at New York flagship store to increase consumersâ&#x20AC;&#x2122; interest and catch their attention.

Chocolate Tasting Class Tiffany Chocolate will cooperate with the manufacturer Michel Cluizel to provide chocolate tasting class for the customers. The purpose of tasting class is to educate customers how to identify a quality chocolate and the best way of tasting.

Activity Map

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BUDGET ALLOCATION

101

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According to the pricing strategy, Tiffany Chocolate will focus on selling by per box. However, some customers may want to buy individual piece. Therefore, Tiffany Chocolate will also provide individual sales. Additionally, the first yearâ&#x20AC;&#x2122;s net sale of Tiffany Chocolate will be around $4.2 million, and the cost of goods sold is around $2.1 million based on the cost of chocolate for one year. The margin will be approximately 50% of projected revenue sales ($4,253,600). The first yearâ&#x20AC;&#x2122;s profit of Tiffany Chocolate will estimate around 34.4%. On the other hand, Tiffany Chocolate is a new product line for Tiffany & Co., so it needs to spend more money on promotion at the first year to build brand awareness. Thus, the estimated communication budget of $638,040 is 15% of projected revenue sales ($4,253,600) of Tiffany Chocolate. The budget will be allocated into five parts: digital media, print media, opening event, window display and chocolate tasting class. Opening event will constitute 30% of the budget due to high costs. Print media will constitute 25% of the budget and only use during prelaunch and launch time. Window display will constitute 21% of the budget. Digital media will be the main promotion strategy, accounting for 15% of total expenses ($638,040). Chocolate tasting class will constitute around 9% of the budget. Window display will be installed for two months at the beginning. Chocolate tasting class will open every three months depending on popularity and requirements.

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MEASUREMENT It is also important to measure the effectiveness of promotion strategies. On the digital media, the measurement of Facebook, Instagram, Twitter and Pinterest will focus on followers and likes. Facebook wants to acquire over 10 million followers and 10 million likes on Tiffany & Co. Facebook page. Instagram wants to achieve average 90,000 likes for each photo, and the hashtag “TiffanyChocolate” should be used 5,000 times per day on average. Twitter wants to acquire 2,000 likes for each post. The goal for retweet per post is set at 500 times. Pinterest wants to achieve 200k followers. Video such as scenes behind the Tiffany Chocolate can achieve 5 million views on YouTube. Tiffany & Co. official website wants to achieve 200k visits per day on average. Active users, those who click and interact with the website should be at least 10%, or 10,000 per day. During the opening event, the customer’s numbers can hit 1,500 on the first day and hit 10,000 on the first week. Finally, the revenue of Tiffany & Co. can achieve sales growth and stop declining sales.

CONCLUSION In 2017, Tiffany & Co. became one of the few luxury jewelry companies to join the food industry by opening the Blue Box Cafe. Food extension is becoming a new trend for luxury brands. In today’s society, luxury jewelry brands face a tougher environment. Decreasing marriage rates and lack of emotional connection lead to declining sales for Tiffany & Co. On the other hand, the premium chocolate segment drives chocolate market sales in the U.S. Compared to jewelry merchandise, chocolate can provide high emotional satisfaction. The purpose of this project is to help Tiffany & Co. develop multiple marketing strategies to combine chocolate’s emotional effect with the jewelry company. Overall, this project will be a good opportunity for Tiffany & Co. to expand into the chocolate business. If the company can combine its romantic brand image with delicious chocolate successfully, it may improve the company’s revenue sales and attract more young customers and potential chocolate customers to Tiffany’s stores.

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