Lindt India Marketing Plan 2014 by Hongsheng Zhang

Lindt & Spr端ngli

MARKETING PLAN INDIA 2014

Hongsheng Zhang 25370197

Eswar Umamaheshwar 24910139

Contents 01

Executive Summary

Introduction

Situation Analysis

Marketing Segmentation and Targeting

Estimate Market Share

Marketing Objective

Marketing Mix Strategy

Action Program

Budget

Monitor and Control

Conclusion

Recommendation

Reference

Executive Summary This marketing plan is to introducing Swiss premium chocolate brand – Lindt into India market as luxury social goods. With the research been conduct which shows the rising demand of luxury gift option. The analysis indicates the rivalry level is not very tense in the industry; however the new entrance is intent to get into the market segment. Through the SWOT, it showcased the strength of the brand is focus on its country of origin, quality, unique distribution and its globally known brand name. But the weakness of Lindt is its narrow product line/price range. The market opportunity is rising along with the economics arise. With the unique culinary culture in India, to create innovative flavour to cater Indian market is also an opportunity for Lindt. In the other hand Lindt is facing threat from new entrance, government corruption, and market’s health concern. The launch will be mainly base on geometrical and demographical segmentation. The brand is targeting “New Money” and “Gold Collar” segment in Mumbai, Delhi, and Bangalore, and expecting to use those market segment to leads other product launch in the foresee future. In order to do so, Lindt has estimated the marketing share for the future decades. The objective of the plan is to build brand awareness, set up distribution, and take over market share from competitor. A Joint Venture strategy is been set as the most adequate entry mode for Lindt. By Joint Venture with Bharti Enterprise to gain the local knowledge and utilize its retail distribution. The product strategy is to utilize Lindt’s premium quality and innovating local flavour as USP to achieve the target positioning. To using Push and Pull distribution strategies combine, to quickly tackle the desire market segment. Also using perceived value pricing methods to gain the most of the ROI and match the perceived brand equity. Moreover the promotion is going to focus on advertising, personal selling, and event marketing to maximize its influence to target market segment. The launching is in phases throughout the first years, the estimate launching cost will be US$8,750,000 and the expect ROI in five year is US$10,000,000. To monitor the market performance, there are five methods to assess base on Pilot study, Review, Distribution, Value, and pricing.

Introduction

This marketing plan is for Swiss chocolate manufacturer Lindt to get into India market. The brand Lindt is own by Lindt and Sprungli group in Switzerland found in 1845, produce high price premium chocolate. (Euromonitor International. 2013) They have six production sites in Europe, two in USA and distribute all over the world. (Lindt. N/A) Lindt is the seventh confectionary manufacturer in the world in year 2012 (Euromonitor International, 2013) Under the brand Lindt, there is five products line, which is Lindt Excellent, Lindt Block, Lindt Lindor, Lindt assorted pralines and Lindt hot chocolate. (Discover Lindt. N/A) Lindt is well known for its traditional Swiss chocolate, but also been known as an innovative chocolate manufacturer for the last few years, after launch the chilli and sea salt flavour chocolate to the market. The product is commonly distribute to supermarket and retail store, but in Swiss, USA, Australia, and Japan Lindt is open up its own flagship café to not only selling their product but serve store made dessert and chocolate drinks to customers. Moreover Lindt offer chocolate creation class in selected store to teach interested customer to use Lindt product to cook/bake at home. (Chocolate Creation. N/A) In 2009, Lindt assign Swiss tennis player Roger Federer to be its global ambassador and also been voted as the “most trusted brand” by Reader’s Digest in European at the same year. (A Perfect Match. N/A) Lindt is competing in premium chocolate industry and also in luxury social goods industry. Within the premium chocolate industry Lindt facing competition among the global either from international confectionary giant as Cadbury, Guylian, Ferrero Rocher, and Nestle, or local chocolatier and manufacturer such as Amul, Choc on, Patchi in India. The luxury social goods industry indicates that the product is used as a social tool instead of consuming by the buyer. The consumption is often occasion–oriented, like anniversary, birthday gift, social event and others. In this field Lindt is compete against wines, flowers, similar positioned chocolate brand and other substitutes.

Situation Analysis

In macro environment aspect, India “has experienced annualized high single-digit GDP growth since 1995” with the rising income and young population – “more than one-third of total aged under 14” (Solca, L, Rosso, A, & Wing, M. 2010), the demand of luxury and quality confectionary is also rising. Moreover, with the country become more urbanized, the social events is more active than ever. (Solca, L, et al. 2010) A upon class gift option is desire for the market. Also “a ‘gifting’ culture among local politicians and an abundance of ‘black market’ cash might serve as levers to empower and accelerate global brands' expansion in India.” (Solca, L, et al. 2010) Porter’s five forces Rivalry among existing competitors - World 7th confectionary manufacturer - Growing market - Strong brand name Threat of new entrants - Low entry barrier - Hard to access to mass distribution but easy to build own specialist store - No switch cost Bargaining power of buyer - Long buying cycle (occasion-orient consumption) - No regular purchase - Seasonal buying - Price sensitive - Small product difference Threat of substitute products or service - Novelty, wine, fashion accessories etc. - Low brand loyalty Bargaining power of supplier - Coco price increase (Josephs, L, & Rai, N. 2013) - Worker easy to train - High labour cost in production country (Workforce and labor costs. 2013) Through out of the Porter’s five forces analysis (Kotler, P, & Keller, Kevin L. 2012), it indicated the current rivalry in India market is not very tense, however the new entrance will be rising very soon after Lindt’s launch. The purchase decision is only raised when occasion appeared, which increase the bargaining power of the buyer. Also with the increase of the market, substitute product is appearing in the market to take over the market share. Furthermore in the supplier aspect, according to international trade trend, there is very high pressure in this force.

SWOT Analysis Strength - Country of origin – perception of Swiss produce good quality chocolate - Strong brand name - Large market share worldwide - Unique distribution channel – flagship cafe Weakness - Limited product price range (all in high price) Opportunity - Growing market in India either premium confectionary industry and social luxury goods industry - Local flavour chocolate – curry, chai etc. Threat - New entrance to the market internationally and locally - Price sensitive customer - Government corruption - Health concern – obesity

Market Segmentation and Targeting

In India, potential luxury product buyers with active social life are living in major metropolitan such as Mumbai, Delhi and Bangalore with a wealth financial condition, and very likely in age of 25 to 45 years old, either trying to get into or already in the upon social class. More specifically dividing those groups of people by their wealth, there would be four levels of it, 1. Old money, 2. New money, 3. Gold Collar, and 4. Outsourcing generation (Solca, L, et al. 2010). The old money customers are already formed or inherent a luxury consumption habit from their own experience or their family brand loyalty, which is very difficult to influence for brand switch. The new money is a group of people who achieved their prosperity through “entrepreneurial ventures launched in post-liberalization India during the last two decades”. (Solca, L, et al. 2010) They are easier to influence and prefer to show off their luxury item to their social group. The gold collar group is people with good education and working in a high-paying position, but most of them are in the age of 35 to 50 years old. They are huge influencer for their employee and within their social circle. The outsourcing generation is “young (typically aged under-30) and represent the most populous and least affluent group among potential luxury consumers”, most of them have a good education and working at “fast-growing Indian business process outsourcing (BPO) and professional service industry”. (Solca, L, et al. 2010) This segment of people is establishing their luxury consumption behaviour influenced by the New Money and Gold Collar group of people. But they are easy to approach and have huge population. According to the segmentation, Lindt is primarily targeting New Money and Gold collar segment in order to influence the Outsourcing generation in the future, offering high quality gift option to fulfil their social needs by position the Lindt brand in high price market. The perceptual map (Figure 3.1) illustrates the estimate position against the competitors in the market.

Figure 3.1 Perceptual Map - Lindt Chocolate Positioning in India Market

Estimate Market Share

First 5 years – 70% of brand awareness in Mumbai, Delhi and Bangalore. – 30% of chocolate market share in general in Mumbai, Delhi and Bangalore – 40% of market share for premium chocolate industry in Mumbai, Delhi and Bangalore – 20% of market share for luxury social goods industry in Mumbai, Delhi and Bangalore Second 5 years – 90% of awareness in Mumbai, Delhi and Bangalore – 50% of chocolate market share in general in Mumbai, Delhi and Bangalore – 60% of market share in premium chocolate industry in Mumbai, Delhi and Bangalore – 30% of market share in premium chocolate nationwide – 20% of market share for luxury social goods industry nationwide.

Marketing Objective

To build brand awareness of 50% of Mumbai, Delhi and Bangalore population in six month. Open Lindt cafe in Mumbai, Delhi and Bangalore in one year Take over 10% of market share in premium chocolate industry in one year in Mumbai, Delhi and Bangalore Create awareness of 30 % population in Mumbai, Delhi and Bangalore to associate product with luxurious and glamor in one year

Delhi

Mumbai

Bangalore

Figure 4.1 India Map -- Location of Dehli, Mumbai, Bangalore

Marketing Mix Strategy

In India while domestically manufactured have generally dominated the market, the current population and have a well-known sense of brands that are globally well known and have a reputation for quality. This is the area we are targeting in terms of getting our product accessible to these markets. Hence we have chosen the markets of Bangalore, Mumbai and Delhi. These are places which have population that have high acceptance of new products and adaptability. Therefore launching new products in above mention location is far simpler. We have understood that due to the complexity of the market situation, local knowledge is crucial. Therefore Lindt decided to entering Indian market with a joint venture with Bharti Enterprises India. They initially had a joint venture with Walmart which did not come through, (Harjani, A. 2013) but the retail experience Bharti had through the failure is an asset for us to explore Indian market. Lindt has a history of rich tradition and a quality that’s unmatched in today’s competitive Indian market and hence we plan to launch the stores of Lindt café in India. The 4 Ps Product Lindt launches its products in which vary from traditional premium chocolates to their range of innovative flavours as its USP,( Discover Lindt. N/A) along with chocolate drinks and various variations in the product range offered worldwide. These products are an array from the most popular ones around the world and that will be suited to the Indian palette. Making the product to be for Indian specific occasions which would help the product gather the required amount of footage and also familiarize the brand amongst the target market of consumers in the cities. The product is faces strict competition from Cadburys in India as they are the leading gifting option till now for the consumers in Indian markets. Our product will be packaged as a wholesome experience with tradition and quality and the kind of service we would provide to the consumers. The chocolates will be designed to cater and serve the need of the Indian consumers as the only thing that satisfies the need of giving and fulfilling the sentiment behind the whole idea of presenting it to another person. The consumer will look at it as an expensive gift that has value to the emotion behind offering such an exclusive product. The packaging of the product will be designed to show the premiumness of the product. As Keller’s product level (Kotler, P, & Keller, Kevin L. 2012) indicated the core benefit of Lindt is social benefits, people buying Lindt as a tool to fulfil their social life. The basic product is average chocolate with a boxed package and a known brand. The expected product is a sophisticated design package, high quality chocolate and adoptable price. The augmented product is the outstanding package design, innovative flavour, and a brand that enhance buyer’s social status. The potential product might be customized flavour and package that caters the occasion and personality of the gift buyer.

Place For the distribution we have push and pull combined strategically to distribute our product. As the execution of the push strategy which means “A push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users.“(Kotler, P, & Keller, Kevin L. 2012) Lindt is planning to open up its own café in Mumbai, Delhi and Bangalore. The location of the shop is been select to match the social status and brand positioning in the above mentioned major cities. Also Lindt will send its sell force to other distribution channel such as department store, high class member only supermarket to promote Lindt product, in order to tackle more specific market segment. The pull strategy is been indicated as “uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries.”(Kotler, P, & Keller, Kevin L. 2012) By using advertising, in store sale, and event marketing to achieve more consumer learning and form a brand perceptions. Our product will stand out in the market as we are not targeting all segments of the market as the affordability of the product is not for all the segments of the market and have no intention to dilute the brand image of making it locally available to all and the price is also kept at a point where the product is not diluted and not over exposed in the market to tarnish the perceived image of the brand and maintain its premium factor, it will be made accessible to only the target market.

Figure 6.1 Lindt Cafe in Sydney Australia

Price The pricing of the product is made such as we penetrate the market enough to create our set of consumers who are loyal to the brand and maintain its premium image and treat as an exclusive product. The value of the product is good for the kind of products that are offered as the target markets affordability and reach to the product is kept in mind. The consumers buy our product which is new and exclusive to the Indian market keeping in mind the Indian sentiments towards the respective occasions and the kind of moneys that will be spent during those times and whenever the need of buying such products arise. The product is an alternate for something exclusive and unique gift along with a lineage of tradition. Hence the pricing will be a little on the higher side to maintain the image of a premium product. According to the above factors, the pricing methods for Lindt in India will be perceived value pricing. (Kotler, P, & Keller, Kevin L. 2012) as the positioning of the product, it is hard to estimate the actual value of the brand and social needs, the perceived value pricing is the most accrue methods to pricing the product to match the positioning and gain the most of the ROI.

Promotion As the uniqueness of the product, the promotion will be focus on advertising, personal selling, and event marketing. The advertising will mainly focus on the magazine advertising. Because the magazine will have more specific target segment and easily form association between Lindt and the position of the magazine. But TV commercial will be broadcasting in specific season to increase awareness of the brand. Potential magazine will be Elle, Tehelka, and MW. The TVC will be broadcast in prior before potential sells peak, like Valentine’s Day, and traditional ethnic festival. The execution of the advertisement will be mostly rational appeal shows the application of the product in real life as “slice of life” (Belch, M, Belch, G, Kerr, G, & Powell, I. 2012) In Lindt café, personal selling is the force to push the sales. By providing personal experience to store visiting customer to form and elevated the perception of the brand. As the Australian store are offering Chocolate creation class in selected Lindt cafe to build personal relationship with potential customer.(Chocolate Creation. N/A) Event marketing is the key to promote Lindt brand, by partnering with other high end brand such as Rolex, 5 start hotels, to associate Lindt with partnered brand equity to transform the perception from partnered brand to Lindt. Also by inviting select market maven/opinion leader to the event to promote the brand directly to their social circle. The sales promotion is not adequate to Lindt in India market, as the sales promotion can potentially lower the brand perception which will reduce the sales to the product. However in the future, after the perception is been formed and reinforced, a bulk package product can be introduce into the market to gain the mass market.

Figure 6.2 Lindt Creation Class

Action Programs

The product will be launched in phases in these cities and then based on the kind of response we would get we formulate the action ahead. The plan is once upon achieving a certain amount of awareness and sale we would conduct a small study to map the effectiveness of the promotion and what are the perceptions of the consumer towards the brand and how do they perceive it to be. Advertising promotions would also be done on magazine/TV during specific seasons to increase sales during this period as that is the period when we expect the most sales of the product to take place.

Action Plan

January

- Selecting location for Delhi Lindt cafe - Communicate with potential retail channel

February

- Start Delhi Lindt cafe design - Confirm distribution channel shelf space

March

- Launch cafe construction - Start import product from Swiss - Broadcasting TV ad and magazine ad for pre-launching

April

- Distributing product to department store, high end supermarket and other retail channel - Continue TV ad and magazine ad but focus on cafe opening

May

- Delhi Lindt cafe open - Stop TV ad but continue magazine ad. - Selecting location for Mumbai and Bangalore Lindt cafe.

June

- Start design process for Mumbai and Bangalore cafe, - Sending sale force to department store and supermarket. - Half year review

July

- Mumbai and Bangalore cafe construction launch.

August

- Start TV ad again in local TV station focus on cafe opening

September

- Mumbai and Bangalore cafe open

October

- Stop all advertising, prepare for winter holiday

November

- Launching new TV ad and magazine ad for New Year and holiday season

December

- Continue all promotion - Review the yearly performance.

Budget

We have kept our spends low as the initial run of the product and how it is received is to judged and what are the factors that need to be changed are all kept in mind and hence we have adopted to direct marketing and below the line advertising and focused more on the distribution and sales channels and strengthened them. We plan to grow to 50% awareness in the coming five yearsâ&#x20AC;&#x2122; time and also be able to manage a 50 % market share in the Indian chocolate industry over our major competitors. The launching cost for this plan is US$8,750,000 and estimate ROI in the first five years will be US$10,000,000.

UNIT US$

Distribution Lindt Cafe

$2,000,000

Retail Distribution Building

$1,000,000

Promotion TV Advertising

$100,000

Magazine

$50,000

Event Marketing

$1,000,000

Partnership

$100,000

Other Government Expense

$3,000,000

Employment

$1,500,000

Total

$8,750,000 15

Monitor and Control

1. Pilot studies: Conducting these studies will give us a fair idea as to where the brand is headed and what its future is going to be and what are the elements that need to be modified. 2. Reviews: A target reviews will be conducted every fortnight and suggestions, feedback from the sales team to be considered and seen when what has to be implemented and changed based on the market responses. 3. Distribution channels: using the local knowledge of the partner firm to strategically base the distribution channels and locations to launch cafes. 4. Values: trying to maximize the value of the home grown brand of Bharti Enterprise along with us and the kind of consumer knowledge they have about the cities and penetrating them with their help. 5. Pricing: Price modulations based on market conditions and response to the brands image is the utmost concern. Competitive pricing to maintain an upper level in the market in the niche chocolate segment. These are some of the monitoring methods to be used by Lindt and Bharti Enterprise to maintain a check on the product launch in India.

Conclusion

This marketing plan is focus on introducing Lindt into India market using joint venture with local enterprise Bharti by setting up the strategy of form perception of Lindt as high price, and luxury social item. And using USP from its premium quality and innovation ability along with building up its own Lindt café and distribute Lindt over department store and high end member only supermarket. Furthermore this plan is also setting up the promotion strategy and pricing strategy to promote the product to the desire market segment. Also the monitor and control of this plan is the measurement for the effectiveness of the market preferment.

Recommendation

• Joint venture with Bharti Enterprise to gain local knowledge • Using Premium quality and innovation flavour as USP • Distribution strategy is push and pull combine. (push – Lindt café, and sales event. Pulladvertising, personal selling etc.) • Using perceived value pricing methods to gain maximum ROI and match the brand positioning. • The promotion will be focus on advertising, personal selling, and event marketing. • The launching cost for this plan is US$8,750,000 and estimate ROI in the first five years will be US$10,000,000. • Marketing performance measurement will base on Pilot studies, Reviews, Distribution channels, Values, and Pricing.

Reference

A Perfect Match. (N/A). Retrieved 08/09, 2013, from http://www.lindt.com.au/noswf/eng/company/roger-federer/lindt-roger-federer/ Belch, M, Belch, G, Kerr, G, & Powell, I. (2012). Advertising -- An Integrated Marketing Communication Perspective. North Ryde: McGraw-Hill Australia. Chocolate Creation Class. (N/A). Retrieved 22/08, 2013, from http://www.lindt.com.au/swf/eng/cafe/chocolate-creations-class/ Discover Lindt Chocolate. (N/A). Retrieved 22/08, 2013, from http://www.lindt.com.au/swf/eng/products/ Euromonitor International. (2013). Chocoladefabriken Lindt & Spr端ngli AG (Food). Available from Warc Retrieved 24/08/2013, from Euromonitor International http://www.warc.com.ezproxy.lib.monash.edu.au/PDFFilesTmp/6a6ac900-ff24-49b3-88b8-ff5 2e49af392.PDF Harjani, A. (2013). Wal-Mart's India departure, a sign of things to come?, CNBC. Retrieved from http://www.cnbc.com/id/101105338 Josephs, L, & Rai, N. (2013). Consumer demand for premium dark chocolate pushes up cocoa price The Australian. Retrieved from http://www.theaustralian.com.au/business/wall-street-journal/consumer-demand-for-premi um-dark-chocolate-pushes-up-cocoa-price/story-fnay3ubk-1226725264051# Kotler, P, & Keller, Kevin L. (2012). Marketing Management (14 ed.). Essex, England: Pearson Education Limited. Lindt. (N/A). The Lindt & Spr端ngli Group. Retrieved 24/08, 2013, from http://www.lindt.com.au/swf/eng/company/ Solca, L, Rosso, A, & Wing, M. (2010). India -- The New Luxury Frontier for the Next Decade. Black Book - The Long-View: 2010 Edition - Pan-European Perspective., p27-36. Workforce and labor costs. (2013). http://ggba-switzerland.ch/: GREATER GENEVA BERNE area Economic Development Agency Retrieved from http://ggba-switzerland.ch/en/getting-started/workforce-and-labor-costs/#.