The chocolate industry is in turmoil. The rise in cocoa butter prices, up 70% since the beginning of the year, is threatening to squeeze margins. Obesity levels in regions like North America and Western Europe are preventing chocolate manufacturers from aggressive volume expansion. Economic growth in EU countries is still weak and consumers remain money-savvy in their purchasing decisions, as they were just after the start of the financial crisis. Against this backdrop, the need to implement cost-efficient strategies to build brand equity is stronger than ever. Milka’s recent strategy of selective marketing is a masterclass in how to achieve this. Others should learn and follow suit.
Chocolate Confectionery in Western Europe
Source: Euromonitor International
Source: Euromonitor International
Note: *2013 is partially estimated
No Such Thing as Free Chocolate
Milka’s classic chocolate tablet range Au Lait du Pays Alpin, available in the French market, is one key example of effective selective marketing. The line’s 100g format was revamped in September 2013. The new presentation shows on the central part of the pack the following message: “Où est passé le dernier carré?” (Where has the last square gone?). The strategy is simple. The chocolate tablet block is sold intact but for one piece, ‘the last square’. When buying the product, consumers are invited to log on to the website www.LeDernierCarre.fr and enter the code number shown on the pack. After that, they are asked to enter their own name and address alongside the name and address of a friend. The ‘missing square’ is sent free of charge to the person of their choice within a period of eight weeks.
No Marketing Gimmick
Some would argue that Mondelez International’s strategy is not radically different to more traditional free sampling in supermarkets. The main difference, however, is its selective targeting. Consumers usually have friends of similar backgrounds and preferences. When they choose who should receive the free chocolate sample, it is not a blind choice but one based on the intimate knowledge of the recipient’s preferences. In this way, Milka extends its potential consumer base because the free samples are reaching a relevant target. This is a much more cost-effective strategy than the distribution of free samples to random customers on their way out of a supermarket.
Most Effective Strategy for Niche Categories
Milka’s selective marketing needs to be implemented across a broader spectrum of indulgence products. Targeted samples could be especially effective in niche categories where information on potential consumers is sparse and hard to come by. Linking information provided through targeted samples with other information available through public social media websites, ie Facebook, might help to widen even further the profile of those receiving free samples.
Stevia-based sugar confectionery is one category which would clearly benefit from targeted samples. One example is Spanish manufacturer Industrias Rodríguez, which introduced a new stevia-based line of boiled sweets in 2013. Virginias Stevia is being advertised as ideal for consumers seeking to enjoy the indulgence of sweets but unwilling to compromise on weight gain and oral health. Targeted samples would undoubtedly help to profile potential consumers. Other categories which could potentially benefit include Fairtrade chocolate products, still quite a minor category outside the UK and the US. Similar benefits would apply to gender-specific snacks, a niche category that is seeing increasing interest in developed markets. In Germany, for example, Intersnack Knabber-Gebäck has just introduced “Chio Mädelsabend“(Chio Ladies’ Night). Mädelsabend is a line of creamy red paprika chips/crisps targeted exclusively at female consumers.
The extension of targeted samples to the entire indulgence industry is crucial for its mid-term expansion. Ask manufacturers, and they will say that consumer profiling for established brands is important. In niche categories, it may become the difference between failure and long-term commercial success.