FMB Year 1 Hotel Chocolat - launch into USA strategy

MARKET ENTRY STRATEGY INTO THE US

Helena Evison N088990

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CONTENTS 1. Introduction 2. Methodology And Research Design Rationale 3. Brand History 4. Where is Hotel Chocolat now?

5. Financial Highlights 7. Brand Essence 8. Brand Mission Statement 9. Brand Values 11. Market Health 12. Brand Health 13. Conclusions and Reccomendation taken from Brand Health 15. Macro Environment: Trends 17. Macro Environment: PESTEL Analysis 21. SWOT Analysis 25. Brand Vision 26. Brand Essence 27. Brand Positioning Statement 29. Competitive Brand Positioning Map - UK 30. Competitive Brand Positioning Map - USA 31. Analysis of Competition 32. Competitor Focus 33. Pen Portrait - UK 34 Pen Portrait - USA 35. Consumer Segmentation 37. Ansoff Matrix 41. Marketing Mix - The 8 P’s 45. Market Entry Strategy 47. Marketing and Promotional Plan 49. Conclusion

INTRODUCTION This report will attempt to put in place a marketing strategy for the British luxury chocolate brand, Hotel Chocolat, in order to launch into the US. A situational analysis will be presented in order to consider opportunities and obstacles they may face. The UK and US market will be compared. This will inform a market entry strategy into the US and a promotional plan.

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METHODOLOGY AND RESEARCH DESIGN RATIONALE The report will be conducted using quantitative and quality research, that is primary and secondary, including online and offline surveys, reports and websites. Marketing model’s, SWOT, Ansoff matrix and Pestel will be used to present potential opportunities and threats they may face which will inform the strategy when launching in the US.

Primary research A questionnaire, directed at UK consumers, was conducted in order to understand the consumer perception of Hotel Chocolat, as well as gaining an insight into consumer behaviour patterns within the luxury chocolate market in the UK. There were 92 responses.

The survey may not present a completely accurate consumer perception of Hotel Chocolat due to the majority of available respondents fitting into the age category of 18-25, which is not their target consumer. This will be considered in the analysis.

In order to gain an understanding of what is involved when bringing a brand from one market to another emails were exchanged with an industry expert, Anna Brown. She is the director of International Development for Claret Showrooms, a wholesale agency and distributor for luxury women’s wear.

Her main role includes launching US brands in the UK and positioning them in a new market.

Secondary research Online sources such as Mintel, Euromonitor and WGSN were utilised in order to gain industry insights and identify emerging trends likely to impact Hotel Chocolat’s entry into the US. Online and offline magazines and newspapers were also used to gain an overview and external review of the brand.

Academic sources were used to inform marketing-model analysis’ such as SWOT and Ansoff Matrix.

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2010

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BRAND HISTORY 1993

Hotel Chocolat launches, becoming one of the first e-tailers in the UK

2006

Angus and Peter buy a 250-year-old cocoa plantation in Saint Lucia in order to grow their own cocoa

They launched their first store on Watford high-street

A luxury hotel, restaurant and spa, is opened on the cocoa plantation in Saint Lucia, known as Boucan

2 new stores are launched in Copenhagen

Hotel Chocolat are awarded Mid-Market Business of the Year at the Lloyds Bank National Business Awards and win 18 Academy of Chocolate awards

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Hotel Chocolat is launched in Hong Kong department store Sogo as a concession

2017

2014

2011

Hotel Chocolat’s first cafe opens in London’s Borough Market

2016

(Hotel Chocolat, 2018)

WHERE IS HOTEL CHOCOLAT NOW? Hotel Chocolat is a luxury brand that, as well as offering chocolate, also offer: wine, spirits, teas, coffee, beauty products, cafĂŠs, restaurants and a hotel. They have 103 stores and 26 cafĂŠs throughout the UK. They also have their own plantation in St Lucia, which serves to produce the cocoa for all their chocolate products. On the plantation they offer a luxury hotel, restaurant and spa. (Hotel Chocolat, 2018) Financially they are in a strong position in the UK with their most recent interim results revealing that their revenue is up 14.7% year on year and website sales grew by 16% in 2017. (Hotel Chocolat, 2018) This puts them in a strong fiancial position to launch themselves in the US.

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FINANCIAL HIGHLIGHTS

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BRAND ESSENCE

BRITISH LUXURY INNOVATIVE COCOA GROWER

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MISSION STATEMENT

We are one of the world’s few chocolatiers to grow our own cocoa, providing high quality with innovative flavours and designs to everybody.

By producing a range of products at a range of prices it allows everyone to appreciate the taste of real chocolate.

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BRAND VALUES “ORIGINALITY We’re constantly striving to be fresh, creative and innovative, and always one surprising step ahead.

AUTHENTICITY Chocolate starts at the roots of the cacao tree. So we got stuck in.

ETHICS You work too hard for bad chocolate.

They work too hard for cheap cocoa.

We’ve been raising the bar for cocoagrowing since 2002.”

(Hotel Chocolat, 2018)

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MARKET HEALTH Technavio’s analysts forecast the global chocolate market to grow at a compound annual growth rate of 5.37% during the period 2017-2021. (Technavio, 2018) As mentioned previously this growth is also reflected in Hotel Chocolat’s figures, with revenue up 14.7% year on year. (Hotel Chocolat, 2018) However there have also been reports suggesting that, due to negative health associations, sales of chocolate has slowed down in Western Europe and North America and the demand for healthier alternatives has increased. (Euromonitor Research, 2017) This shift in demand may be to Hotel Chocolat’s advantage. Their mantra of ‘More Cocoa, Less Sugar’, enables them to position themselves as a healthier alternative to conventional chocolate.

Furthermore, within the US, the chocolate confectionery category is forecasted to grow by 7% from 2017-2022 indicating an opportunity to launch in the US. (Euromonitor Research, 2018)

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BRAND HEALTH Results from the survey conducted in the UK indicated that although there is a high level of awareness of Hotel Chocolat the majority of respondents were not aware of their other products which are unrelated to chocolate confectionery.

The significantly low follow rate on social media suggests they are not using it enough to target consumers. Social media is an essential promotional tool within today’s marketing climate, it has the ability to create buzz and awareness for a brand at no extra cost. This should be considered when launching into the US as a way of reaching out and engaging with a new market.

38% perceived that Hotel Chocolat have a strong brand image, this signifies room for improvement in order to ensure the brand captures the attention of the US market when launching.

AWARENESS, USAGE AND PERCEPTIONS

76%

of respondents are aware of hotel Chocolat as a British Chocolate brand.

20%

Less than are aware of their other product offerings including, wine and spirits, tea and coffee and their beauty range.

59% 2.17%

haven’t purchased from them

38%

follow on social media

believe they hold a strong brand image

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CONCLUSIONS AND RECOMMENDATIONS TAKEN FROM BRAND HEALTH Overall the primary research presented that although there is a high level of consumer awareness for Hotel Chocolat it has not necessarily been reflected in the level of consumption of their products by the respondents.

This could be due to the lack of engagement and promotion on social media, with a low number of respondents stating they followed them on at least one of their platforms. If they were to increase their activity on their social media platforms it could encourage engagement and potentially increase sales. However, due to the limitations of available respondents, the majority were aged 18-25, which does not fit into their primary target audience of 25-45. Therefore these results do not reflect the overall perceptions of Hotel Chocolat within the UK. The lack of awareness of their other product offerings could be down to brand name including the French word ‘chocolat’, possibly misleading the consumer they are just a chocolate company. Therefore they should increase the promotion of their other products such as their beauty range, ‘Rabot 1745’. This could be done through influencer marketing, one of the current most successful marketing tools currently used by many brands, claimed to produce 11 times the returns on investment of traditional advertising. (Forer, 2018)

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THE MACRO ENVIROMENT Trend: ‘In Touch’ WGSN reports that one of the most influential trends emerging in 2019 will be the concept of getting back in touch with things, whether that be physically or emotionally. (White, 2018) It can include anything from moods to food. The central focus is on the demand from consumers to decrease the amount of time spent online and on social media in order to get in touch with reality. They report that we are entering a new ‘emotional era’ and 2019 means creating products and services for consumers feelings. (White, 2018)

How it could be adopted by Hotel Chocolat: Hotel Chocolat already offer a multi-sensory experience, particularly through their cafes connected to their stores, allowing consumers to ‘get in touch’ with the brand. However they have the opportunity to further optimise this trend through their in-store experience. For example as well as offering samples of the chocolates they could also offer samples of the beauty products, wines and spirits. Their could also be an opportunity to provide spa treatments using the beauty products.

Trend: Plant-Based Goes Mainstream WGSN have reported 74% of US and UK Millennials are prepared to alter their diet due to an increasing awareness of the environment.

This has caused many consumers to shift to a more plant-based lifestyle, which includes choosing alternative milks. (Lambranho, 2017)

How it could be adopted by Hotel Chocolat: Currently Hotel Chocolat offer dairy-free chocolate, which is essentially dark chocolate.

They should consider using alternative milks, such as almond milk, soya milk or cashew milk in order to produce vegan milk chocolate and white chocolate. Supplying this demand would increase their reach to a wider range of consumers.

Trend: Pop-ups

Pop-up stores are continuing to be a popular promotional tool used by brands due to the high level of attraction from consumers as they are often associated with exclusivity and unpredictability. (Bingle, 2017) Furthermore in the US they are a reflection of their increasing culture of transience. (Pollock, 2017)

How it could be adopted by Hotel Chocolat:

This could be a potential promotional tool Hotel Chocolat could use when launching in the US in order to attract new consumers and build excitement around the brand.

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THE MACRO ENVIROMENT Trend: Circular Economy A 2018 consumer trend report by Mintel highlighted that 72% of consumers would consider purchasing products with packaging made wholly/partially from recycled plastic. (Mintel, 2018)

How it could be adopted

by Hotel Chocolat: Hotel Chocolat should consider using recyclable materials for their packaging in order to adopt the circular economy trend. It could also aid market growth due a study by Unilever revealing that a third of consumers are now opting to purchase from brands that appear to be helping the environment. (Unilever, 2017)

Trend:Smartphone Addiction

Trend: Brand Collaborations Collaborations have quickly become a popular strategic marketing ploy for brands. Many companies have discovered the advantages from joining forces with another brand and consumers are becoming increasingly responsive to them.

(Scharf, 2015) Collaborations help build consumer awareness, change brand perception, drive innovation and reach new audiences. (Scharf, 2015)

How it could be adopted by Hotel Chocolat: When launching in the US Hotel Chocolat should consider if there is a brand there that fits in line with their values in order to collaborate with. They could combine their assets with another brands to produce a unique product to sell in the US. This would be a convenient tool in aiding market entry strategy as they could work with a brand well established in the US to reach a new audience.

A recent report from Deloitte on global consumer mobile trends informed that over a third of consumers admitted to checking their mobile in the first five minutes of waking up. (Deloitte, 2017)

How it could be adopted

by Hotel Chocolat: These statistics give evidence that this is where the attention of the consumer lies, therefore Hotel Chocolat need to improve their online presence, particularly on social media. By utilising online platforms like Youtube, Facebook, Instagram and Twitter and creating memorable and eye-catching content it will enable them to grow awareness and create engagement with their consumers.

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THE MACRO ENVIROMENT PESTEL ANALYSIS Focusing on factors that will effect Hotel Chocolat’s expansion into the US

POLITICS Following Brexit there has been talks of negotiating a free-trade deal between Britain and the US. (Ahmed, 2018) However the European Union have warned any efforts made to agree a new deal with the US would be deemed ‘unacceptable’ due to the unstable relationship between the EU and US, perceiving that it would threaten the EU’s chance of agreeing a strong deal with President Trump.

(Ahmed, 2018)

Effects brand If a a free-trade deal is negotiated it would be good opportunity to launch in the US as the costs to import the products would be reduced which could in-turn increase the chance of a high profitmargin. It would also give them a competitive advantage to similar brands from different countries also wanting to launch in the US. (Virtue, 2018)

ECONOMIC In the UK exports of branded food are predicted to grow by a third to £6bn by 2020, with the USA being one of the top three export markets for the UK, as well as France and Ireland.

(Achorda, 2018) Revenue for the food and beverage industry in the USA is predicted to grow by 11.8% each year until 2022 which will result in a market quantity of £19,420m. (Statista, 2018)

Effects on brand These economic forecasting’s imply there could be opportunity for Hotel Chocolat to achieve success in the USA due to signs of economic growth for British branded exports into the US and predictions for growth within the food and beverage sector.

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SOCIAL A market research country report on chocolate confectionary in the US suggests consumers are looking to reduce sugar intake in order to battle the increasing rates of obesity, diabetes and chronic health conditions. This has increased the demand for healthier alternatives. (Euromonitor, 2017)

Effects on Brand Since they launched Hotel Chocolat’s mantra has been ‘More cocoa, Less sugar’ due to wanting produce high quality chocolate that doe not need sugar to mask the lack of flavour. (Hotel Chocolat, 2018) This ethos positions them in a strong place to capture a market seeking to indulge whilst consuming less sugar.

TECHNOLOGY It has been reported that through the use of a gene-editing tool it could aid the breeding cacao trees that contain longed-for attributes such as enhanced resistance to diseases. There are various plant diseases that critically limit global production, with 20-30 percent of cocoa pods destroyed pre-harvest. (Science Daily, 2018)

Effects on brand This technology could be utilised by Hotel Chocolat due to the potential of the cocoa beans on the St Lucian estate acquiring this disease. This could be extremely detrimental to Hotel Chocolat’s success, particularly as they will need to increase the production if the launch in the US is a success.

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ENVIROMENTAL Hotel Chocolat are transparent about the actions they are taking to become more sustainable and ethical. They run an ‘Engaged Ethics’ programme which ensures their cocoa farmers are getting are getting a fair wage that comes directly from them. (Hotel Chocolat, 2018)

Effects on brand It is likely that when launching into the US maintaining their ethical and environmental standards will become more of a challenge due to the increased production rate, therefore it is important for Hotel Chocolat to consider the actions they should take to continue their sustainable efforts.

LEGAL Under provisions of the U.S. law, importers of food products being introduced as commerce into the U.S. market must be accountable for certifying that their goods are safe, hygienic, and labels meet the requirements of the US. They are also controlled by an FDA inspection at U.S. ports of entry. If products are found not to adhere with U.S. requirements the FDA may hold shipments of products offered for import in custody. (FDA, 2018)

Effects on brand Hotel Chocolat must ensure their products meet the USA’s requirements before they are imported, this may mean altering the packaging labels and recipes.

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SWOT ANALYSIS Strengths

• Well established within the UK

• 10 new stores were opened on the high street in the last half of 2017, whereas competitors such as Thornton's have been closing down • One of the only chocolate brands in the UK to produce their own cocoa beans which provides transparency within their supply chain

Weaknesses • Their first launch into the US were not as successful as hoped and they closed their two stores when the lease expired.

• Have a wide range of product categories, some which consumers are less likely to associate with Hotel Chocolat and therefore wouldn’t look to buy those products from them, for example their beauty range.

• Their ‘More Cocoa, Less Sugar’ mantra adheres to the increasing attempt consumers are making to reduce their sugar intake due to health implications

• Products are only distributed to their stores and concessions within John Lewis and online retailers, Amazon and Ocado - limited offline accessibility compared to competitors such as Thornton’s and Montezuma’s, which are stocked in supermarkets.

• Increase in online sales

• Limited social media presence

Opportunities • Stock products in supermarkets to grow market, increase consumer awareness • Launch in the US in order to grow in the global market • Increase activity on social media in order to create a more personal engagement with their consumers • • • •

Pop-up s Collaboration Recyclable products Plant-based products

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Threats • The lack of consumer awareness of their other products could be preventing potential sales • The ‘More Cocoa, Less Sugar’ mantra may not appeal to an American market due to their chocolate having typically less cocoa than British chocolate and more sugar.

• Lack of social media presence is allowing competitors to fill this space in grasping consumers attention • Their previous launch into the US was unsuccessful due to the cost of shipping to only two stores

Before Hotel Chocolat launch into the US they must rectify their weaknesses and consider the threats to ensure they are in a stable position to maximise success within the US. Some suggestions for them ensure stability and success are: • Consider distributing to supermarkets such as Waitrose as it is in partnership with John Lewis • Build awareness of their other product ranges through social media and influencer marketing • Consider medium to sell products when launching in the US that is less costly.

• Consider an alternative export strategy when launching in the US

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TOWS ANALYSIS

Threats

Opportunities

Strengths

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- When launching America they could focus on communicating their ‘More Cocoa, Less Sugar’ in order to target consumers following the health and well-being trend of reducing sugar intake

Weaknesses

- Due to their first launch in the US not being successful due to the cost of shipping to two stores they could consider running pop-ups instead which would be less costly and is a popular trend in the US.

- As a well established brand in the UK it suggests they have a strong brand image that could compete with the US market

Increase their presence on social media by posting about the growing and production process for their chocolate to differentiate themselves in the market and providing a more personal touch that their competitors would not be able to offer

Reduce product offering as it could be complicating brand identity and effecting profit They should also consider stocking in supermarkets to ensure for competitiveness and maximise visibility and awareness

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WHERE SHOULD HOTEL CHOCOLAT GO?

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BRAND VISION

To successfully launch in the US in order to become one of the top luxury chocolatiers in the major markets, globally.

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BRAND ESSENCE EMOTIONAL VALUES: Ethical. Temptation. Pleasure FUNCTIONAL VALUES: Gift. Indulge. Satisfy PERSONALITY: Sleek. Luxurious. High-end

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BRAND POSITIONING STATEMENT

Hotel Chocolat is for men and women who appreciate the finer things in life. They are a premium chocolate brand and one of the only to manufacture from bean to bar. Unlike conventional chocolate brands their mantra is ‘More Cocoa, Less Sugar’. Cocoa is their primary ingredient in all of their chocolate products. The ratio of cocoa to sugar is critical, low levels of sugar are used to ensure the high quality of the cocoa is enhanced. Furthermore, because their consumers health and well-being is a priority they are committed to using only what nature supplies and use only natural ingredients in all of their products. This is why they have chocolatiers working rigorously in their Cambridgeshire inventing room coming up with the most innovative and natural recipes and combinations.

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COMPETITIVE BRAND POSITIONING MAP UK INNOVATIVE

EXPENSIVE

INEXPENSIVE

TRADITIONAL

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COMPETITIVE BRAND POSITIONING MAP USA INNOVATIVE

EXPENSIVE

INEXPENSIVE

TRADITIONAL

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ANALYSIS OF COMPETITION

Hotel Chocolat have multiple competitors that are positioned closely to them due their similar price points and the product offering holding a similar level of innovation. In the UK their main competitors are Montezuma’s, Betty’s and Prestat, in the USA their main competitors are Jacques Torres, Chocopolis and Vosges, all in the premium end of the market. When launching in the US they must ensure they position themselves where there is a gap in the market in order to provide consumers with an incentive to choose them over one of their competitors, who are already established brands within the US. They could do this by communicating their ‘Engaged Ethics’ Fair Trade Scheme and the fact they manufacture their products from bean to bar. This would differentiate themselves in the market.

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COMPETITOR FOCUS

USP - Manufacture all their own products in the UK DISTRIBUTION- Available to buy in Waitrose, John Lewis and Sainsbury’s nationwide, online and in their 5 stores situated throughout the south of the UK, online website VISION - To become “Britain’s Greatest Little Chocolate company” (Montezuma’s, 2018)

USP - Founded by Pastry chef and chocolatier Jacques Torres, author of two desert books and host for his tv show Chocolate with Jacques Torres DISTRIBUTION - 8 stores located across New York VISION - To provide Jaques Torres’ hand-crafted mastery to the population of America.

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HOTEL CHOCOLAT PEN PORTRAIT

A Hotel Chocolat consumer from the UK: • Leads a busy lifestyle during the week, working a fast-paced, demanding job.

• Uses the weekends to unwind and relax with friends and family.

• Enjoys holding dinner parties and introducing their friends to new delicacies they have found.

• When cooking they enjoy experimenting by combining unique flavours • Only ever has high quality chocolate, wine and cheese to accompany the meals.

• Does their weekly grocery shop at Waitrose, but on the weekend will pick bits up from their local market.

• Other hobbies include regularly attending intense circuit training which allow them to indulge on the weekends.

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A Hotel Chocolat consumer from the US: • Always makes time for friends and family and often enjoys treating them to luxury gifts due to their kind and caring nature.

• Enjoys people’s company • On the weekends are a fan of engaging in activities and experiencing things with family and friends, whether that be going on a hike, wine tasting in a vineyard or visiting an art gallery.

• Health is a priority and they regularly attend soul-cycle classes • Tries to do all their food shopping in whole-foods to ensure it’s all organic produce.

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CONSUMER SEGMENTATION

DEMOGRAPHIC GEOGRAPHIC PSYCHOGRAPHIC BEHAVIOURAL 37.

• Men and Women • High-income professions • Aged 25-45 • ABC1 social group • Well-educated • Stores are located in varying cities across the UK • More stores located in the south compared than the north of the UK which tends to be more affluent • Urban areas • Ambitious • Career driven • Fulfilled • Mature • Generous • Brand loyal • Self-indulge • Willing to spend more for quality

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ANSOFF MATRIX EXISTING PRODUCT

EXISTING MARKET

(Penetration) • Increase awareness of other product categories that are not directly related to Chocolate • Increase activity on Social Media as a promotional tool

NEW MARKET

(Market Development)

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• Launch into the US using existing products in order to limit risk • Begin with pop-ups in order to evaluate best location without committing to longterm costs that may effect profits • Evaluate which products are more likely to appeal to US market

NEW PRODUCT (Product Development) • Continue to create new combinations, like the ‘Pretzel Dippers’, in order to maintain innovative brand image • Produce a range of chocolates using alternative milks in order to adhere to the growing plant-based trend

(Diversification) • Collaborate with St Tropez to launch a ‘chocolate mousse’ fake tan that would be incorporated in their beauty range • St Tropez sre globally successful • Similar target market - would open awareness of Hotel Chooclat to their market

ANALYSIS OF ANSOFF MATRIX From the Ansoff Matrix it can be identified that ‘Market Development’ ‘and ‘Diversification’ are the most logical aspects to help advise Hotel Chocolat’s strategy for maximising success when launching in the US. Market development limits the potential risk due to having an existing product that successfully generates profit within a different market.

However collaborating with St Tropez Tan, a globally successful brand with a similar target market and branding style, to launch a fake tan, would expose Hotel Chocolat up to St Topez’ audience in the US offering the potential to capture their market.

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HOW IS HOTEL CHOCOLAT GOING TO GET THERE?

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THE MARKETING MIX- THE 8 P’S

PRODUCT

Hotel Chocolat have a wide product range including chocolate, wine, spirits, tea, coffee and beauty products. When launching in the US they should consider which products are most likely to appeal to this market.

Hotel Chocolate could consider launching seasonal chocolate products as their initial strategy when entering into the US market. A 2018 US market research report estimated that seasonal chocolates are responsible for 24% of total sales in the U.S. chocolate confectionary market.

(Packaged Facts, 2018) In 2016 seasonal launches were accountable for 25% of global chocolate new product launches, presenting a considerable demand for seasonal chocolate products. (Mintel, 2017) This suggests Hotel Chocolat should launch during a US holiday and offer season appropriate chocolate products.

PLACE

Hotel Chocolat’s first launch in 2009 was not a success due to the shipping costs to two stand alone stores. (Lawson, 2015) Instead they should consider distributing through concessions in luxury department stores, such as Barney’s, Bloomingdales, Sak’s Fitith Avenue and Nordstrom, all in line with Hotel Chocolat’s luxury positioning.(English, 2015) This will reduce the risk of profit-loss and ensure visibility of the brand to their target consumer.

They should also hold a tour of pop-ups that run through the major cities of the US in order to grow consumer awareness and create interest around the brand. Pop-ups are reported to be worth $45 billion dollars in the US, (Pollock, 2017) presenting financial opportunity for Hotel Chocolat to grow by using this platform.

PRICE Hotel Chocolat have strategised their pricing to position themselves in the luxury market.

However their pricing also suggests they want to make themselves available to a wide audience by having prices starting from 1.60 for the ‘chocolate foiled hearts’ and going up to £160 for their ‘signature chocolate cabinet’ (Just focusing on their chocolate products in this instance). (Hotel Chocolat, 2018) Hotel Chocolat should continue with this pricing strategy when launching in America as it allows them to capture a wider market.

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PROMOTION In 2014 a survey was conducted which compared 20,000 UK and US consumer’s behaviours.

The survey revealed that US consumers are considerably more effected by emotive advertising compared to UK consumers. (Chahal et al., 2014) When launching in the US Hotel Chocolat should consider communicating their promotions and advertisements their ‘Engaged ethics’ programme, which is run for the purpose of paying their farmers a fair wage and aiding them in the production of their cocoa to help them generate business.(Hotel Chocolat, 2018) If this was effectively communicated to consumers in the US it could increase the appeal due to their empathetic nature.

Holding pop-ups could also be a key promotional tool in order to engage with consumers and build awareness to the exclusiveness and unpredictability.

PEOPLE Hotel Chocolat have over 1.300 employees and they are all valued as important in helping the brand evolve and the brand helps them in reaching their full potential. (Hotel Chocolaat, 2018) Hotel Chocolate have also created ethical partnerships with over 170 cocoa farmers on Saint Lucia and started a medical centre for a cocoa-farming community in Ghana that provides crucial healthcare to more than 5,000 people. (Hotel Chocolat, 2018)

PROCESS Distributing products to concessions in department stores rather than opening stand-alone stores reduces the high running costs that could effect the brands overall revenue. Distributing to department stores in a range of cities in the US will allow Hotel Chocolat to identify which locations could be the most successful, if they were to open a permanent store in the future, as they would be able to compare sales figures.

PHYSICAL EVIDENCE When Hotel Chocolat launch the concessions and pop-ups in the US they should maintain the slick, minimalist and modern aesthetic of their store layout and packaging. This is an integral aspect of conveying their luxury brand image.

PERFORMANCE

Their interim results for 6 months (ended December 2017) highlighted a positive performance with revenue up 14.7% year on year. 10 new stores were opened in the UK and 2 in Hong Kong.

Online sales also saw an increase of a 16%. (Hotel Chocolat, 2018) Hotel Chocolat’s performance in 2017 puts them in a stable and promising position to launch into the US.

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MARKET ENTRY STRATEGY In 2007 Hotel Chocolat first made their products available in the US via their website (Tierney, 2007), subsequently in 2009 Hotel Chocolat opened two stores in Boston and New York. However, the cost of shipping to just two stores did not have economic viability and consequently they shutdown after the lease expired in 2013, but they have continued their online trading. (Lawson, 2015) This would indicate that in Hotel Chocolat’s first phase of relaunching, opening stand alone stores will not be financially feasible until they become established within the US market. Instead, they should launch as concessions in luxury department store Nordstrom. Concessions are an apt platform to introduce their products to a new market as it allows for clear visibility of the brand to their target market. Nordstrom have 122 stores located across the USA, allowing Hotel Chocolat a choice of locations to launch their brand. (Nordstrom, 2018) Nordstrom are renowned for stocking luxury fashion and lifestyle brands; making it an appropriate department store for Hotel Chocolat to be positioned in. Launching as a concession in multiple locations will allow them to compare how different regional markets within the US are interacting with the brand.

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An additional strategy, identified from the macro trends and the diversification element in the Ansoff’s matrix, would be a collaboration with global fake tan brand St Tropez. Together they would produce an organic ‘chocolate mousse’ fake tan that combines St Topez’ formula of mousse tan with the natural ingredients of the cocoa beans from Hotel Chocolat’s cocoa plantation to project the natural scent and colour of cocoa. The product would be an extension of Hotel Chocolat’s current beauty range. In order to create a sense of exclusivity, the product would only be sold within Hotel Chocolat’s concessions in the US and St Tropez, selling a limited range on their website.

A collaboration with another brand is one of the most economical ways to reach new audiences and enter new markets, as well as creating brand stretch. (Richardson, n.d.)Within collaborations it is important that each brand gains something in return from working together. St Tropez originate from California, so they have a large existing market in the US, as well as being the leading tanning brand globally. (St Tropez Tan, 2018) Collaborating with them would expose Hotel Chocolate to St Tropez’ large existing audience and be a key driver in building awareness in the US. For St Tropez it would provide them with the opportunity of creating a new, unique product using high quality organic ingredients from Hotel Chocolat’s cocoa plantation.

Although the two brands are in different product categories, they share a similar consumer segment of women aged 25-45 who desire luxury products and are willing to pay premium prices. Both brands’ packaging is sleek and minimalistic, using monochrome colours. A collaboration with St Tropez will help to position them in a similar section of the market in the US.

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MARKETING AND PROMOTIONAL PLAN Prior to launching the concessions in Nordstrom, Hotel Chocolat should arrange a tour of popups that run through the major cities of the US. This would be for the purpose of creating a buzz around the brand, driving awareness and promoting their online and offline channels as well as selling their products within the pop-up. Pop-ups are a key trend as identified in the Macro enviornment.

The transient culture of pop-ups have proven to be hugely popular in the US. The market size for pop-ups is estimated to be $45 billion to 50 billion per year in the U.S, showing huge profit potential. (Hatch, 2017) As a brand with many sensory aspects, including the taste of their chocolates and alcohol products, the scents of their perfume, and the feel of their skincare products, it is important for consumers to engage with Hotel Chocolat on a physical level. Pop-ups provide the opportunity to offer this without the economic risk of being contractually obligated to rent a space for at least six months.

Once the tour of pop-ups is complete they should hold seasonal pop-ups in the cities that their concessions are showing the most demand. Seasonal shopping is hugely profitable in the US and in 2017 it was reported to account for more than a quarter of annual US retail sales.(Deloitte, 2017) As Hotel Chocolat is a gifting brand with many of the products designed for specific seasons it is logical for them to maximise their visibility during seasonal periods of the year. The impermanence of pop-ups provides the perfect opportunity to trial stand-alone stores during different seasonal events.

The growing addiction consumers have to their mobile phones, as identified within the macro trends, indicates Hotel Chocolat should use social media as their primary promotional tool. Firstly, they should begin by increasing their online activity, which would mean regularly posting on all platforms to ensure the maximum amount of exposure. A higher activity rate increases the chances of consumers becoming aware of them. Online engagement with consumers also encourages consumers to invest time and money on a brand. (Isentia, 2018) An additional promotional tool Hotel Chocolat should use to expose themselves on social media and help their entry into the US would be using US micro-influencers to promote their brand. Micro-influencers are reportedly more trusted by consumers than celebrity endorsements this is because of their close relationships they have with their audiences, subsequently they are reported to be more profitable. (Pulse Advertising, 2018) It would also allow Hotel Chocolat to work with influencers living in specific areas close to where each Hotel Chocolat concession is located. This would enable them to directly focus on capturing the attention of consumers living a close enough distance to the department stores Hotel Chocolat is stocked in.

49.

CONCLUSION

50.

Through a focused evaluation and analysis of Hotel Chocolat, a market entry strategy and marketing promotional plan for Hotel Chocolat to launch in the US and maximise global potential has been drawn up and recommended.

To conclude, the following highlights how Hotel Chocolat can maximise global potential in the USA: - Concessions will be launched within Nordstrom department stores - Within the concession a small number of products within each category will be offered in order to inform the consumers of their extensive product range and encourage online sales.

- A limited number of their tan collaboration with St Tropez will be stocked and clearly visible in order to attract new consumers that are aware of St Tropez but not aware of Hotel Chocolat - A limited range will also be stocked on St Tropez’ website to attract global attention - Before the concessions are launched they will run a tour of pop-ups that run through all the cities that the concessions will be located.

- The pop-ups will be held during the seasonal event of Easter and they will market their Easter-specific products to introduce US consumers to their main product genre of chocolate.

- A variety of samples in all of their product categories will be offered to promote and build awareness of their entire product offering that is available online.

- The range available for purchase within the pop-up will be limited to create exclusivity and limit costs.

- By offering seasonal products it provides a purpose for consumers to make a purchase.

- Once the concessions are launched similar events will be held during popular holidays within the US, such as Independence Day, Halloween, Thanksgiving and Christmas, with each one used to sell seasonal-specific products.

After one year of launching the concessions and holding multiple seasonal pop-ups it should be considered whether there are cities that have presented a high enough demand and are generating enough sales in order to launch a stand alone, permanent store that would be financially beneficial for Hotel Chocolat.

51.

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ILLUSTRATIONS

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Hotel Chocolat (2018). Interim Results. [image] Available at: http://www.hotelchocolat.com/on/demandware.static/-/Sites-HotelChocolat-Library/default/dw2ef389a9/ H1%20Results%2021%20Feb%202018.pdf [Accessed 29 May 2018].

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APPENDIX Survey Questions

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Survey Results

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Email exchanged with industry expert, Anna Brown, director of International Development for Claret Showrooms, a wholesale agency and distributor for luxury women’s wear. Her main role includes bringing brands from other countries, including the US, and positioning the in the UK market.

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I confirm that this work has gained ethical approval and that I have faithfully observed the terms of the approval in the conduct of this project.

Date 01.05.2018 Signed…………………………………………

Word count: 2925

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