We have many strong competitors. Cadbury has an excellent brand name in chocolate, along with strong distribution and good sales. Nestle is a dominant player in the industry and competes in the chocolate market. Kraft Jacobs Suchard (KJS) is a similarly large multinational player, but has less of a presence in chocolate compared to Nestle. Cadbury is the highest-priced among our major competitors, but we are a price setter in tea and can replicate that in chocolate. On a macro scale, there is opportunity in chocolate. Food beverages remain a growth category while coffee and tea are plateauing. As a company, our image and distribution will allow us to launch a premium chocolate, something that the market seems to be lacking on the national stage presently. More luxurious drinks -- such as espresso for the home -- are the fastest growth categories among all hot beverages. Food beverage consumers span the socio-economic spectrum but tend to be concentrated in what will ultimately be our core demographic. In short, the market is ready and so are we.

Question 3. The company should implement a strategy that is based on a careful analysis of its strengths and weaknesses, and the prevailing market conditions. The company's strengths include the ability to integrate the chocolate business into existing production facilities, national distribution and established premium pricing. The sales force knows how to sell high volumes of high end products. The company's main weakness is a lack of experience in chocolate -- it knows the competitors from other businesses but does not know the segment and has no established brand. The market does have opportunity, however, in the form of increasing interest in luxury, favorable demographics and a lack of a true national luxury chocolate. The major threats come from the bigger competitors, Nestle and Cadbury, both of which have great reputations in chocolate.

Market entry should be based on premium-positioning. The product should be the most luxurious chocolate available in most stores. The name Silk...

Other names should also be tested. The price point should be set higher than other chocolates, in line with the higher quality. It is recommended that the launch begin with national distribution backed by a strong marketing campaign. Distribution should be focused on high end stores -- avoid Iceland and other low-end supermarkets as presence in such stores would damage the luxury image of the product. Competitors are not marketing chocolate aggressively, so the campaign is likely to stand out. Focusing on younger demographics (for example 25-44) would allow the company to capture customers whose brand loyalties have not yet been established.
Sales targets need to be set in order to effectively measure the launch. These should be based on the existing chocolate market and estimates of what percentage of that market is available for a luxury brand. According to customer profiles, the ABs, and possibly C1C2s (for different reasons) are the core target market. Market share estimates should be based on these consumers. The company should measure success against three key metrics. The first is brand awareness, as the product is new. This should include measures of brand impressions -- what do people think of the brand? The second major measure should be sales/market share. The third will be market penetration -- what percentage of potential retailers are carrying the product initially, after six months and after one year. We want to know how well we're reaching our retailers.

Sales are easy to track electronically, as is market penetration, and this data is already sent back to us from our distributors and retailers. Surveys of retailers, however, will help us to gain feedback not only on retailer impressions of the product but also if our demographics are what we had in mind. For brand awareness, this needs to be measured by consumer surveys. By doing this, we will be able to gather the information we need to adjust our strategies for the future and the post-launch phase of the marketing.