Brand strategy case 2013

Case Study: the introduction of

Simon Heptonstall

Presented to Prof. Dr. Tobias Langner in accordance with the requirements of the HEC Executive Brand Management course at the University of Geneva Business School

1.

Introduction

In September 2012 the German arm of Switzerland’s Lindt & Sprüngli, one of the world’s leading manufacturers of premium chocolates, announced the launch of a new series of chocolates, called ‘Lindt Hello’. With their distinctive packaging, bearing slogans like “Nice to sweet you” and a youth-focused marketing campaign, Lindt Hello represents a clear break from Lindt products of the past. It also raises important questions about how the new product line fits into the company’s overall business strategy and its possible feedback effects on Lindt’s corporate brand.

2.

Lindt: the early years

Chocoladefabriken Lindt & Sprüngli AG ‘s roots stretch back to the 19th century. This was the pioneering era of Swiss chocolate manufacturing and of personalities like François Cailler (who set up the country’s first chocolate factory near Vevey in 1819) and Philipe Suchard who would both go on to establish famous chocolate companies.

Founded in Zurich in 1845 by David Sprüngli, Sprüngli & Son were the first company in the German-speaking part of Switzerland to produce chocolate. An important turning-point came with the acquisition of a small but prestigious Bernese chocolate manufacturer, Rodolphe Lindt & Fils. Lindt had developed a revolutionary process of combining cocoa beans, cocoa butter and sugar, grinding them together in a machine originally intended for milling spices. The Lindt technique produced chocolate with a particularly smooth texture

and removed any bitter taste in the finished product. Purchasing the company, for what was at the time an astronomical sum (1.5 million gold francs), in 1899 Sprüngli & Son not only acquired Lindt’s manufacturing secrets but also the rights to the Lindt brand name which had already become famous throughout Europe1.

3.

Lindt: international expansion

Lindt’s first period of international expansion in the early 20th century was cut short by recession in the 1920s and increasing government protectionism throughout Europe in the run-up to World War II. Post-war, the company concentrated mainly on the Swiss market: until 1980 roughly 80% of its chocolates were consumed domestically. It was only in the 1980s that Lindt & Sprüngli developed into the international group that it is today, becoming a public company listed on the Swiss stock exchange in 1986. Lindt Germany in Aachen became a wholly-owned subsidiary in the same year. In 1989 Lindt USA, located in Stratham, New Hampshire started production. By 1992 Lindt Germany had already overtaken its parent company in sales and employed more people.

The current chairman and CEO Ernst Tanner, formerly of Johnson & Johnson, joined Lindt in 1994 and initiated another round of international expansion, this time primarily through acquisitions such as US chocolatier Ghirardelli and Austria’s Hofbauer.

4.

Lindt: the current situation

Tanner’s nearly-20 years at the head of Lindt have been a time of stability and prosperity: sales have tripled and profits have increased sevenfold. Tanner is also the company’s largest shareholder.

Though the global crash of 2008 caused the first fall in Lindt’s share price in the entire Tanner period, the premium chocolate market has shown itself to be largely recession-proof.

This is because premium chocolate is a ‘lipstick luxury’2 – a relatively inexpensive indulgence that people continue to buy during an economic downturn when they have had to forgo costlier luxury purchases.

Even so, as the market for premium chocolate is decelerating in Europe and the continuing high value of the Swiss franc is making exports less competitive. Lindt & Sprüngli clearly need a strategy to revive sales – either bolstering demand for their existing products or by developing new products to appeal to new markets.

The US economy shows signs of revival and the US, as the world’s largest confectionery market, offers significant opportunities for growth. According to Lindt USA, in 2011 Americans consumed roughly half the amount of chocolate per capita as the Swiss (11.6 lb compared to 23.7) but, significantly, a far smaller proportion of that consumption was in the premium category (0.3lb compared to 4.3lb in Switzerland)3. Industry analysts Vreeland & Associates predict continued expansion of the US chocolate market from US$ 17.3 billion in 2009 to $19 billion in 2014 with the premium sector set to grow from 12% to 17% of the total during the same period4.

5.

Lindt: brand positioning

Although Ernst Tanner is considered to be the person most responsible for positioning Lindt as a premium chocolate brand, this process in fact started earlier 1979, when it adopted the slogan “The finest chocolate in the world”. Previously, Lindt’s marketing communications played on the association of chocolate with childhood, often using images of children and dolls, with little to suggest that the company wished to be seen as more upmarket that Swiss rivals Suchard or Cailler.

One can easily extrapolate Lindt’s current brand attributes from their corporate slogan/ logo strapline. In “Master Swiss Chocolatier since 1845” we can read: 1. Mastery of the techniques of chocolate production, expertise hence high quality.

2. Origin of the brand in Switzerland, as prestigious for chocolates as origin in Belgium.

3. A long-standing tradition in the chocolate industry.

To ‘quality’, ‘prestige’ and ‘tradition’ we can perhaps add enjoyment of consuming such a high-quality and exclusive product. When giving Lindt chocolates, these attributes add value to the gift and reflect positively on the giver (Kapferer (2008) underlines the importance of a brand’s reflective component – the effect it has on how a consumer is viewed by others).

The ‘Maître Chocolatiers’ key visual, introduced in 2004 and seen on all of Lindt’s print, poster, TV and web communication, encapsulates Lindt’s positioning very effectively. In a spotless kitchen, bathed in warm orange light, one or more ‘chocolatiers’, all in their 50s and dressed in white chef’s uniforms are seen delicately whisking melted chocolate in a brass bowl or carefully placing a roasted almond on top of a Lindt praliné. Though Lindt’s chocolate production is of course now fully-automated, the Maître Chocolatiers communicate the attention to detail and expertise that justifies its higher price and premium positioning.

The Maître Chocolatiers campaign, developed by Lindt marketing chief Dr. Uwe Sommer and the FCB Wilkens advertising agency (now Draft FCB), has been extremely successful. According to a 2005 report by market research company GFK, its introduction was found to have immediately increased awareness of Lindt as a manufacturer and reinforced the image of the brand, all this while spending significantly less than its competitors. Images of the Master chocolatiers at work also serve to differentiate Lindt from its competitors who have tended to use lifestyle concepts in their communication, rather than images of chocolate production.

Mahmud (2010) has suggested that the 2010 introduction of tennis star Roger Federer as the first brand ambassador in the company’s history has been a subtle way of modifying Lindt’s positioning in response to the 2008 recession. Using the star by himself or next to a Maître Chocolatier chimes with the company’s Swissness and exclusivity (Federer also endorses Rolex watches) but his reputation for being down-to-earth allows Lindt to speak to customers in a slightly more casual way.

Lindt posters: c. 1910, 1949, 1968

6.

Hello: product description

In the Hello range there are various boxes of pralinés, 100g tablets and 39g ‘chocolate sticks’.

The flavours are: Caramel Brownie, Cookies & Cream, Strawberry Cheesecake and Nougat Crunch (colour-coded orange, yellow, red and blue, respectively). The packaging, covered in English-language slogans like “I’ll make your tummy yummy” and “I just wanna say thank you”, differs significantly from Lindt’s usual, elegant design. The background for the group pack-shots appears to be a New York skyline, complete with a stylised version of the Chrysler Building. There is no sign of a Maître Chocolatier anywhere and we are clearly a long way from Switzerland!

To promote ‘Hello’, Lindt chose a new agency, Rapp Germany, rather than Draft FCB Hamburg. Rapp describe the campaign in the following terms: “The strategy consists of presenting the product as a desirable ‘lifestyle accessory’: just like the TV ads that resemble music videos try to arouse the same feeling as savouring chocolate in the viewer. [...] corresponding print and online communication, along with a social media campaign can turn consumers into fans and a website provides guidance and makes them want more.”5

Video is at the centre of the Hello campaign, with a spot for three of the four Hello flavours.

Rather than trying to attach human personality traits (Aaker, J. 1997) to Lindt Hello in general, each 26-second spot presents a different stylishly dressed 20-something character as the embodiment of a particular flavour in the Hello range. The male character personifying Hello Nougat Crunch, for instance, is seen first jumping a motorcycle over shipping containers, then smashing up an electric guitar, Pete Townsend-style, and finally Karate-chopping through a concrete block: presumably all ‘crunchy’ activities. Strawberry Cheesecake is a blonde girl who plays tennis and wears lots of pink clothes. Cookies & Cream is represented by a shorthaired brunette in a plaid shirt. This type of youth lifestyle imagery has often been used by other confectionery companies in the marketing of chocolate bars, chewing gum or soda.

Using short video clips are an effective strategy for delivering branded content. TV and web video and mobile telephony have already converged and online video consumption is predicted to sky-rocket this year due to the increasing popularity of tablets and the imminent arrival of 4G wireless protocol.

These videos, shot in Milan by French/Lebanese director duo Leila & Damien de Blinkk, can be watched on lindt-hello.com The website also provides product information, online ordering and competitions.

The Rapp campaign also gives Lindt Hello a presence on a number of Web 2.0 community-building/social websites: Youtube, Pinterest, Instagram and Facebook (with 6500 ‘likes’ at the time of writing). This is in line with current thinking on the need for brands to encourage engagement and participation in spite of their subsequent loss of a certain degree of control over their communication. Moon et al (2008) state that people are becoming less and less inclined to trust governments, religions and figures of authority but will listen to the opinions of other consumers, preferably friends or members of their own social networks. It is consequently more profitable to use the abovementioned websites to encourage the devel-

opment of a thriving Lindt Hello online community than to attempt ‘top down’ communication that may be viewed with suspicion. Thought the technology is new, the objectives are those of what, since the early 1980s (Agaraya & Singh 2011), has been termed ‘relationship marketing’ or ‘customer relationship management’: to interact with customers building up loyalty and trust as awareness of a product and a favourable image alone are not sufficient to guarantee customer purchase decisions in the long term.

Another pillar of the campaign was a high-profile event, the ‘Lindt Hello VIP Nite’ that took place at Berlin’s Goya nightclub (described by Time Out as a ‘glamorous and glitzy’ venue) on the 4th of September 2012. Here a number of German celebrities (mostly from reality-TV shows such as ‘Germany’s Next Top Model’) danced the night away with Boris Becker’s DJ son Noah at the turntables.

In short, neither the new products nor the manner in which they are being promoted have much in common with Lindt’s established traditions.

a Maître Chocolatier

7.

Mr. Hello Nougat Crunch

Hello positioning

The Rapp agency’s press release spells out who they imagine to be a typical Hello customer: “Our client Lindt & Sprüngli, the premium chocolate manufacturer, has entrusted us with creatively communicating the launch of the new brand “Hello”. With this new brand, they aim to reach new target groups by appealing to open-minded world citizens who care about quality and who maintain an urban and sophisticated lifestyle. To achieve this we are devising a strategy to position “Hello” as an international fashion brand [eine Trendmarke in the original text].”6

Lindt’s usual target demographic has been described by one researcher as being “women aged 30 and over with higher incomes and education levels”7 and by another as “35 to 54 years old females with a household income of over $50,000” (Brandweek 2001). Hello is clearly designed to appeal to a younger customer. Judging by the ages of the people in the Hello campaign videos (two female, one male), the ‘new audience’ that Lindt is targeting is the ‘young adult’ segment, aged between 22 and 30. The reference to consumers ‘who value quality’ and the fact that Hello is priced firmly in US trade journal Candy Industry’s ‘Upscale

Premium’8 category suggests that these young adults are also professionals with a reasonable amount of disposable income. Rapp Germany explicitly aims to endow Lindt Hello with a cool and trendy personality in order to appeal to this new market segment.

One way of doing this is by developing associations between the product and the fashion industry. An important precedent in creating a Trendmarke, which must have influenced the agency’s thinking, is Diet Coke’s success in establishing itself as the fashion industry’s fizzy drink of choice. Starting in February 2011 this has involved using personalities from the fashion world as ‘brand ambassadors’ (first Karl Lagerfeld, then Jean-Paul Gaultier) or to design limited-edition Diet Coke bottles, as well as partnerships with fashion magazines, the sponsorship of fashion parties and events. Using events as part of a marketing strategy to connect with young ‘fashionistas’ has also been done by Diet Coke, who have organised parties very similar to the ‘Lindt Hello VIP Nite’ during London and New York fashion weeks. Slim, glamorous catwalk models drinking a beverage aimed at women interested in losing weight is a very compelling image. Associating chocolate (which is not known for helping weight loss) with the Lindt Hello ‘VIP Nite’ Diet Coke Gaultier Launch fashion world is a rather less obvious ‘fit’!

8.

Hello: a line extension or a sub-brand?

When a firm is seeking to expand or attract new customers, introducing new products has always been a popular strategy. It can either add a new model to the range that it already produces (a product line extension) or can put its brand equity to work and move into an entirely new product category (a brand extension). For chocolate manufacturers such category extensions have included Mars ice-creams or milk drinks and Lindt cake decorating products.

A tablet of Lindt Hello is essentially the same product as a bar of their existing Lindt Excellence line. Both are comprised of a flavoured, sweet filling that is encased in chocolate. Both are designed to be broken into squares before being eaten. Both are wrapped in aluminum foil and then paper. This is an extension to Lindt’s product line rather than a move into a new product category.

There are many advantages to extending a product line as a means of reaching a new customer segment. As well as reduced costs and catering to a wider range of tastes, an extended product line discourages new entrants to a particular market and, if stocked, increases a brands share of shelf space, attracting more attention from prospective consumers.

Quelch & Kenny (1994) also point out the particular appeal of line extensions to managers: they are a short-term method of delivering growth to impatient shareholders and avoiding the career risk of being involved in the unsuccessful development of a new brand.

For chocolate manufacturers, an extended product line has been found to create a favourable image in the minds of consumers. Investigating the effects of product variety on the perception of chocolate, Berger, Dragnska, and Simonson (2007) conducted a number

of experiments where subjects were asked to compare two fictitious brands, one said to produce 30 different flavours, the other only 10. They found that when respondents were asked to choose between the two they were more likely to pick a chocolate made by the supposedly high-variety brand. They also perceived it as being of higher quality and even claimed to prefer the actual taste of the product.

There are, of course, potential drawbacks to product line extensions. Multi-item lines cost more to produce and the introduction of a new model or flavour can cannibalise the sales of a firm’s existing products. Extensions also run the risk of diluting the image of a brand in customers’ minds or contaminating it by creating new associations. Janiszewski and Van Osselaer (2000) warn that vertical line extensions to a lower-quality are particularly dangerous because they threaten to taint a brand’s otherwise higher-quality image.

Because of this, for a line extension to be successful there needs to be a degree of consistency. Wicke10, responding to Quelch and Kenny (1994), warns managers that they must: “[...] carefully evaluate not only how the brand affects the line extension but also how the line extension affects the brand. A brand’s equity consists of the key elements that drive demand for brand products and services. This includes some aspects of how customers perceive and experience the brand – its image – but not necessarily all aspects. It is critical to identify the key equity elements and to ensure that the line-extension strategy is appropriately designed to leverage, protect, and reinforce the brand equity. Consistency with brand image may not he enough; consistency with the brand equity is required. If the line-extension image jars with any of the brand equity elements, it will erode the entire line.”

If there is a risk that a new product will create dissonance with existing brand elements, firms can create a sub-brand which is endorsed by the parent brand. This is essentially the halfway point between using an existing band name and creating an entirely new brand with ownership ‘behind the scenes’ (the method Proctor & Gamble and Unilever have used until recently). Marriott opted for this strategy when launching a series of lower-cost hotels in the US they named them ‘Fairfield Inn by Marriott’ and ‘Courtyard by Marriott’11. This puts Marriott’s brand capital to work attracting customers but, crucially, provides a mechanism for differentiation. Being seen as separate but also linked to Marriott hotels is intended to protect the parent brand against negative spillover effects.

With the total break with Lindt key imagery and tone of voice in the Hello campaign, the company is encouraging customers to see this new range as being different to their existing offerings. They stop short of making Hello a sub-brand, however, as the logo makes it clear that we are supposed to read ‘Lindt Hello’ and not ‘Hello by Lindt’ or simply ‘Hello’12.

The Hello packaging layout is another case in point. Exactly like all the company’s other chocolate products, the gold foil-stamped and embossed Lindt logo is centred at the top of the wrapper or box. Under the logo, separated by a horizontal line, the product name (‘Petits desserts’, ‘Lindor’, ‘Création’ and so on) is always written in capitals in the Optima typeface.

Here Hello breaks with Lindt design conventions and uses two separate handwriting typefaces.

This use of handwriting (‘informal script’) typefaces for “Hello my name is” and the

flavour is intended to make the packaging look ‘informal’. According to Dr. Adalbert Lechner (CEO of Lindt & Sprüngli Germany): “The world has become more informal and world-famous firms are led by people in Tshirts and sweaters with rolled up collars. The way we speak is changing, we chat, we tweet, we send short text messages: today even relationships can be ended with an SMS. Our “Lindt Hello” is thus an informal product.”13

What it actually does is to make Lindt Hello look less of a premium product and more like a downward vertical line extension (even though it is in a similar price bracket to the company’s other offerings). Lindt Hello’s refusal to commit to proximity to or distance from the company’s existing range results in a hybrid: a horizontal line extension that looks like a lowcost sub-brand. This risks creating the negative feedback effects mentioned earlier. Seeing Hello products on a shelf next to Lindor or Excellence could very easily make Lindt itself appear to be moving downmarket.

9.

The removal of ‘Swissness’

Perhaps the most striking thing about Lindt Hello is the removal of any reference to Switzerland.

Swiss goods and services enjoy an excellent reputation worldwide, maybe more than those of any other country. They are seen as representing quality, exclusiveness and reliability. This reputation enables goods of Swiss origin to be to be positioned in higher price brackets.

For Keller (2008) Swiss origin is a ‘secondary association’. The country of Switzerland has its own associations that are borrowed and leveraged by Lindt whenever it describes itself as a ‘Swiss Master Chocolatier’.

Interestingly, the 2006 University of St.Gallen ‘Swissness Worldwide’ survey stated that this process actually works in reverse with it being the quality of Swiss products that provide the country itself with a favourable reputation. Because of this, they declare that Swiss companies and Switzerland as a country are ‘in a relation of mutual dependence’.

“Brand Switzerland is less influenced by concerted communication or specifically targeted brand management; rather, it is Swiss companies conduct that provides the main impact. Swiss goods, products and brands have had the greatest influence on the positive image of Switzerland. The management of Switzerland as a brand is thus taken on daily by all the actors who present themselves as Swiss.”

For chocolate, Swiss origin has been found to go a great deal further than simply providing a favourable reputation. In a recent study, Wilcox, Roggeveen, and Grewal (2011) conducted a series of blind tests during which people were given identical pieces of unbranded (American) chocolate to taste but told the first chocolate was from China then from Switzerland. A majority of respondents claimed to actually prefer the taste of the same piece of chocolate when told it was Swiss.

In his statement at the launch of Hello, Ernst Tanner does voice his initial concerns about the removal of Swissness from Lindt Hello. He also introduces a distinction between German and Swiss Lindt products.

“One can accuse us Swiss of being stubborn and our stubbornness is perhaps justified as this may be the reason why we are so very successful in certain areas. I must admit that when I first saw that brand name of “Lindt Hello – Nice to Sweet You” I said to myself, this time the German team has gone crazy! After all we are a conservative firm and we are proud of our Swiss traditions.”14

Tanner then backtracks and takes ownership of Hello for Switzerland, suggesting that the meaning of ‘Swissness’ itself has changed and needs to be revaluated. Switzerland is a land of innovation and Lindt Hello is a product that epitomises this modern, forward-thinking country, just like the Swatch.

Lindt POS display, Zürich airport

“... Yet on the other hand I can think of numerous Swiss pioneers, of those courageous and inventive people who, thanks to their single-mindedness with innovative and groundbreaking ideas achieved success and revolutionized entire industries. The Swiss who turned the watch trade on its head with colourful plastic watches or transformed the European breakfast tradition with their “Müsli”. You do not necessarily have to feel like William Tell to be convinced that “Lindt Hello – Nice to Sweet You” hits the right spot and will create enthusiasm among Swiss consumers.”

The head of Lindt Germany, Dr. Adalbert Lechner appears to contradict Tanner’s statement.

Rather than Lindt Hello being the product of a ‘new’ Switzerland, Lechner sees it as a global product for a smaller, more interconnected world.

“Why is Lindt heading in a new direction? The world is changing at great speed so that even a tradition-based brand cannot remain static (…) The world has also shrunk, we now live in a global village. An ever-increasing number of people can be part of the jetset, on condition that they have friends to take them to the airport as taxi fares these days are more costly that plane tickets to London. English has become the global lingua franca and expressions like ‘Germany’s Next Top Model’, ‘Fashion Week’, ‘Catwalk’ now sound perfectly normal to us in German. This is why ‘Hello’ conveys a feeling of urban living.”15

In his influential 1983 essay ‘The Globalization of Markets’, Theodore Levitt had excitedly predicted that in the future companies would offer standardised products for sale globally.

“Corporations geared to this new reality benefit from enormous economies of scale in production, distribution, marketing, and management. By translating these benefits into reduced world prices, they can decimate competitors that still live in the disabling grip of old assumptions about how the world works.”

There are in fact important barriers to creating a ‘global’ chocolate of the kind that Levitt might have envisaged: local tastes. Firstly we are said to develop preference for a certain type of chocolate in childhood, be it Lindt, Cadbury’s or the much sweeter Hershey’s which becomes strongly-ingrained. According to a Cadbury Schweppes public relations manager quoted in Margolin (2001): “By and large well-established markets have an established chocolate taste – the UK and commonwealth countries are defined by Cadbury chocolate, the US by the Hershey Bar and the Continent by high-cocoa content products such as Lindt and Suchard. With the taste of chocolate defined in early childhood, it is thus pretty difficult to break.”

Then there are localised tastes for flavours and fillings, such as the prevalence of peanut and peanut butter chocolates in the US. It would seem to be on this distinct US market that Hello is targeted.

10.

A product for the US market?

In the Lindt press release accompanying the Goya Berlin party, Ernst Tanner had already stated that, after Germany and Austria, Hello is set to be launched worldwide: “Hello, the new generation of chocolates will first be available in Germany then launched worldwide in 2013”. 16

With Lindt Hello being produced in the quintessentially American flavours of brownie, cheesecake and cookies & cream (the cookies in question being Nabisco’s ‘Oreos’, the US’s best-selling biscuit), the presence of US imagery on the website and the fact that the product already ‘speaks’ English (“Nice to Sweet You”...etc) one might speculate that it has in fact been designed for the US market. The presence of Hello products in Lindt US’s ‘Spread Chocolate Cheer: Holiday Gifts 2012’ catalogue of products available to order this would certainly support this theory.

There has been a clear pattern of increased investment by Lindt into its US subsidiary – the company spent $30 million to expand its Stratham, New Hampshire factory in 2006, more than doubling the plant’s size. The construction of a new in-house bean roasting facility was also announced August 2010.

Extensions are an important tool for expansion into countries offering higher growth opportunities. In 2011 Mars introduced a peanut-butter version of its Snickers bar onto the US market to compete with the hugely popular Hershey’sowned Reece’s peanut-butter cups and a limited-edition maple syrup Snickers in Canada. Nestlé have pursued a very successful product-line extension strategy with its KitKat bar in Japan.

Launching no fewer than 19 varieties of KitKat (including Soy sauce-flavour KitKat green tea, soy sauce and sweet potato flavours) in 2009 has made it the number one confectionery brand in the country.

Conclusions While Lindt Germany deserves credit for its willingness to take risks and develop innovative new products rather than just sitting back and hoping the good times will continue, there are serious problems with Hello. These stem from an unwillingness to decide how similar or different Hello is to the rest of Lindt’s products.

If it is to be seen as part of the Lindt range to the same degree as a Lindor truffle or a golden Easter bunny, there needs to be consistency and what Kapferer (2008) terms a confirmation of the presence of brand core facets (in this case: prestige, quality, Swissness and tradition) in each product. Apart from a general consensus among reviewers that Lindt Hello is high-quality chocolate, these core facets are glaringly absent.

If, on the other hand, the company wishes to indicate difference between this new product and the rest of the Lindt range, a sub-branding strategy would have been preferable in order to avoid negative feedback effects. While developing ‘Hello’ as a new brand without any clues as to ownership would be expensive and risky, using an endorsed identity: ‘Hello by Lindt’ rather than ‘Lindt Hello’ would have provided customers with a mental framework for differentiation and protected the parent brand from contamination.

Usual Lindt product naming convention

Lindt Hello, official logo

Option 1: Lindt Hello as a coherent line extension

Lindt Hello, logo as seen on packaging

Option 2: Lindt Hello as an endorsed sub-brand

At present, Lindt Hello falls somewhere between the two and there seems to be a very real danger that by introducing a line extension that looks ‘cheaper’ (even if it is only intended to look ‘younger’ and ‘more informal’) than its other products, customers will infer that it is Lindt itself that has somehow become less of a premium chocolate manufacturer. The company therefore risks alienating its core customer base.

Notes 1.

Almost 200 years later another chocolate company would purchase a rival for what appeared to be an inflated price. During the hostile takeover of Rowntree by Nestlé in May 1988. The Swiss company paid 6 times Rowntree’s share value. not just for manufacturing plants and distribution channels but to acquire ‘Smarties’, ‘Quality Street’ or ‘After Eight’ and the equity that these brands had built up over the course of a century of existence.

2.

The lipstick effect also explains the resilience of the restaurant and entertainment industries during recessions.

3.

Figures quoted by Lindt USA CEO Thomas Linemayer in: Candy Industry ‘Positively Premium’ May 1, 2011

4.

Figures quoted by Steven Rosenbush, Vreeland Associates Chocolate Market Trends Monday, June 4, 2012 (from: http://www.vreelandassociates.com/demand-forpremium-chocolate-is-booming-despite-the-recession/)

5.

From: http://www.rappgermany.com/de/arbeit/Lindt-Hello.html

6.

ibid.

7.

„Kernzielgruppe sind Frauen ab 30 Jahren mit gehobenem Einkommen und Bildungsniveau, die Wert auf einen gepflegten Lebensstil legen.“ (from: http://www.gwa.de/images/effie_db/2005/250965_128_Lindt.pdf)

8.

US trade journal Candy Industry divides the premium chocolate category into three segments: ‘everyday gourmet’ at $8.00-$15.99/lb, ‘upscale premium’ at $16.00$23.99/lb and ‘super premium’ above $24.00. At $5 for 3.5oz, a bar of Lindt Hello works out at $22.86/lb.

9.

From: http://www.marketingweek.co.uk/news/diet-coke-to-extend-fashionistastrategy/4000613.article

10.

Same reference as Quelch J. & Kenny (1994) page 59

11.

The example is from Aaker (1997) pages 138-139

12.

Though the three videos do in fact start with the word “Hello” and close with a “by Lindt” endorsement.

13.

From http://suite101.de/article/ausserst-gelungene-premiere-von-lindt-hello--niceto-sweet-you-a137941#ixzz2JZgPZhad

14.

ibid.

15.

ibid.

16.

From: http://www.nachrichten-aktuell.com/lindt-hello-vip-nite-suser-abend-mit-vielprominenz-in-berlin.html

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