Thorntons report

Market Report

FCP1 ● XIAO LI ANG ● N0351471 ● MAY 2011

CONTENTS1. Introduction

2. Methodology

3. Rational for Choosing the Brand

4. SWOT Analysis

5. PEST Analysis

6. Brand Model

7. Consumer Behaviour

8. Consumer Segmentation

9. Positioning Map

10. Flagship Store Environment

11. Communication Strategy

12. Appendix

13. Illustration

14. Reference

15. Bibliography

1This report aims to help Thorntons, which is a UK confectionary brand and m a i n l y s e l l s c h o c o l a t e products, a successful move t o t h e U S m a r k e t a n d launches of its flagship store there. The report will include a short rational for brand chosen, specify the city where the brand will move into, and provides a clear S W O T a n a l y s i s o f t h e Thorntons and one of its American competitors, PEST analysis will also be included in this report. Moreover, consumers behaviours in different market will be taken

into account and discussed in order for Thorntons to adopt to the U.S local market nicely, while its originally based in UK market. What is more, this report will focus on consumer segmentation, i d e a s f o r fl a g s h i p s t o r e e n v i r o n m e n t a n d communication strategy for launch of the new store, and will also suggest a suitable and feasible collaboration with the brand to make more profit in the U.S market. In addition, brand model and positioning map will also available in the report.

Introduction

2Every year thousands of new products in the food and drinks i n d u s t r y a r e l a u n c h e d b y manufacturers hoping to gain c o n s u m e r s i n t e r e s t w i t h i n n o v a t i v e d e v e l o p m e n t s (Verdict, 2009: online). In order t o g a i n a c o m p r e h e n s i v e k n o w l e d g e a b o u t t h e confectionary market, to give Thorntons a solid support for launch new business in the U.S m a r k e t , v a r i o u s r e s e a r c h methods will be used. For p r i m a r y r e s e a r c h , a questionnaire will be produced and passed on to Thorntons p o t e n t i a l c o n s u m e r s v i a Internet, then efficiently collect

the responses to help the brand find out the demands and the direct reaction of the market, and provide a creative way that T h o r n t o n s m a y s t a r t collaboration in U.S market. Also, interview with Thorntons c o n s u m e r s a n d i n - s t o r e investigate will be as a part of research, which could help understand exist market and strongly support translation. For secondary research, Mintel and Verdict reports will be used a s a t r u s t w o r t h y d a t a resources, to get exact data of global and local business and help the brand better developed in the future.

Methodology

3Rational for Choosing the BrandThorntons is the number o n e ‘ C h o c o l a t e a n d Confectionery’ brand and the number 18 overall brand in the UK according to Superbrands’ latest r e s e a r c h ( M a y 2 0 0 9 ) . E s t a b l i s h e d b y Joseph William Thornton in 1911, Thorntons is one o f t h e U K ’ s o l d e s t c h o c o l a t e r e t a i l e r s ( T h o r n t o n s , 2 0 1 1 : online), and well-known for its deeply British image and highly heritage.

D e s p i t e t h e c u r r e n t crippling financial climate that the world faces the

US retail market is still valued at more than $150 billion (market research, 2009:online). While many American industries took a hit during the economic recession, one seemed to thrive. as retail sales increased 3% from 2008, t h e U . S . c h o c o l a t e industry in 2009 reached a record $16.9 billion, according to Chocolate Market in the U.S.: Trends a n d O p p o r t u n i t i e s i n Premium, Gourmet and Mass Chocolate Products b y m a r k e t r e s e a r c h (2010: online). Packaged Facts forecasts the U.S.

chocolate market will exceed $ 1 9 bi l l io n in 2 0 1 4 . Th e American chocolate market is a mature, differentiated and exacting market. Therefore, Thorntons as a renowned British chocolate brand enter the US market at this time would probably boost the company’s profits rapidly, and promote the awareness of the brand, prepare for expanding market on a large scare in the f u t u r e . W h a t i s m o r e , T h o r n t o n s c a n u s e t h i s opportunity to upgrade itself, aiming to become a global, luxury chocolate brand, not only develop in its home market.

There is a tendency that the demand for premium chocolate will persist as a leading growth

trend, especially when the economy recovers (packaged f a c t s , 2 0 1 0 : o n l i n e ) . I n consequence, Thorntons, at the first place, launch of new flagship store in New York City, specifically Manhattan may be the best choice. New York is a international metropolis and h a s a l a r g e p o p u l a t i o n , Thorntons opens new store t h e r e w i l l t a r g e t m o r e consumers basically, and being a heritage British brand, this w i l l a t t r a c t a n u m b e r o f A m e r i c a n c u s t o m e r s t o d i s c o v e r t h e r e a l B r i t i s h fl a v o u r . M o r e o v e r , t h e shopping environment in New York makes it a city which can afford high priced premium chocolate products to the greatest degree, as Thorntons will present there.

4

SWOTThe SWOT analysis is a key tool to h e l p d e t e r m i n e s t r e n g t h s , weaknesses, opportunities and threats of the company, which can provide a strategical analysis of company’s businesses and o p e r a t i o n s . T h i s p a r t w i l l demonstrate the SWOT analysis of Thorntons and Hershey’s which is one of its major competitors in the U.S market.

Thorntons

Strengths• Traditional British Image• On-line store• Strong product and brand portfolio• Mature distributing system• Gift-wrapping service• Well-designed website will be

positive for promoting the brand• Service to customise products

Weaknesses• The brand awareness within the

U.S market• Inefficient use of resources• Declining operating margin

Opportunities• Publicity• New product development• Collaboration• Growing organic food market• Attracting younger age group• Growing opportunit ies in e-

commercial• A growing number of needs in

confectionary market

Threats• Existing American-loving brands• Sma l l and more spec ia l i s t

chocolate producers• Large manufactures• Recession

Hershey’s

Strengths• An American icon for its chocolate

bar• A large consumer group within the

U.S market• Experienced• Strong brand portfolio and image• Diversified Products• Powerful Partnership• Cooperative with students and

professors

Weaknesses• Highly leveraged• Concern for the natural environment • Poor International performance• Inefficient on organisational design

Opportunities• Positive market outlook• Product diversification• Growing market for premium

chocolate products• Increasing health consciousness• Demographic• Joint Ventures

Threats• Potential competitor like Thorntons• Existing competitive environment• Price conscious consumers• Price increase of milk and coco

beans

Analysis

5PEST

P e s t a n a l y s i s i s q u i t e important for a brand to consider its environment b e f o r e s t a r t i n g t h e business process. Its aims to observe various factors within political, economical, social and technological aspects which can deeply affect the development regards to the brand.

Political• Government restrict inport policy

Economical• Disposable income among U.S

consumers has decreased in relation to the crisis

• Devaluation of U.S dollars

Social• Raising social concern about

obesity• Preference of taste• Seasonal demand (in particular,

Easter, Christmas)• Reduction of labour• Male customers, children and

teenagers lowering the overall age profile of consumers

• Environmental friendly• Organic food demand• Fair trade

Technological• Investigated programme to

install EPOS (electronic point of sales)

• Internet and interactive television sales operation.

• Hi- tech mater ia l using for flagship store

The PEST analysis has revealed the factors t h a t c a n a f f e c t s Thorntons launch of its new business in America b o t h p o s i t i v e l y a n d n e g a t i v e l y . S o c i a l factors, apparently, are significant for the brand to move to the new market. America has a vary high obesity rates, thus it maybe necessary f o r T h o r n t o n s t o consider altering their brand image as healthier p r o d u c t s . T h e marketing of this new healthier, organic range is likely to show how Thorntons has taken into account consumer concerns with regards

t o a t t e m p t i n g t o combat obesity as well as boost sales figures. Considering American preference which might be different with UK market is also important for brand to promote. Additionally, according t o M a r k e t R e s e a r c h ( 2 0 0 9 : o n l i n e ) t h e seasonal demands of c h o c o l a t e p r o d u c t s d u r i n g E a s t e r a n d Christmas is far more than the average level, thus to introduce new products or present a new ad campaign which relate to holiday theme could help the brand attract more consumers in the U.S market.

Analysis

6 Brand Model

Brand Essence

British Heritage

chocolate art

Attributes

Innovative

Gift choice

Festival

Promise

Personality

Authentic

Traditional

Friendly

Source of Authority

Premium Quality

Hand made

Communication

Brand history

Market reputation

Public image

7Consumer Behaviour

In order to successfully translate Thorntons from UK to the US market, considering the different c o n s u m e r b e h a v i o u r which may caused by cultural difference and efficiently addressed the problem is crucial to the brand.

The chocolate industry in America has enjoyed a

steady increase in demand since the opening of the first chocolate factory in 1 7 6 5 . T h e a v e r a g e American now consumes 10 pounds of chocolate annually. However, recent r e p o r t i n d i c a t e d t h a t “epidemic obesity among Americans coupled with t h e i n c r e a s i n g h e a l t h awareness threaten the future viability of the

t h e i n d u s t r y . ” ( m a r k e t m a t t e r s i n c . o r g , 2 0 1 0 : online). While, the health news is not always bad when it comes to chocolate. As the news reported by Market Matters that recent studies have found chocolate may help prevent both cancer and heart disease. Dark chocolate raises level of cancer-fighting anti-oxidants in the bloody, and a study in the journal of American Medical Association fi n d s t h a t e a t i n g d a r k chocolate decreases blood pressure (2010: online). Based on these findings and facts, Thorntons may pay special attention to promote its dark chocolate products, h ig h l ig h t in g t h e h e a lt h y image behind chocolate, w h i c h m a y s t i m u l a t e p u r c h a s i n g , m e a n w h i l e supplying low-fat, fat-free and low calorie chocolate in

addition to normal full-fat c h o c o l a t e . A t e n d e n c y followed by the mass U.S chocolate market.

Another key factor within consumer behaviour lies in t h e d i f f e r e n t s e a s o n a l demand from the UK and the U.S market. America is a highly seasonal market in t e r m s o f d e m a n d o f chocolate. Fig.1 displayed consumption is highest at H a l l o w e e n , f o l l o w e d b y Easter, Christmas and Valentines’ Day over the decade. And it’s important to note that the quality of chocolate is different on different holidays. Market M a t t e r s ( 2 0 1 0 : o n l i n e ) i n d i c a t e s c h o c o l a t e purchased for Halloween is likely to be cheaper but mass market, notwithstanding Valentines chocolate market

is typically tend to focus on premium quality but low quantity. Compared with the UK market, according to the Mintel Seasonal and Boxed Chocolate report (2010: online), in 2010 retail sales of chocolate confectionery is ₤264 million account for 54.1% for the year, follow by the Christmas which sales ₤163 m i l l i o n . N e v e r t h e l e s s , a t Halloween and others merely sales ₤5m that only 1.1% of the y e a r s e l l i n g ( s e e fi g . 2 ) . I n addition, there is a tendency that the sales of Easter chocolate confectionery wil l continue growing, which increased 6.1% between 2008-10 (Mintel, 2010: online).

Consequently, for a prepared and efficient launch in the U.S market o f T h o r n t o n s , A m e r i c a n consumer behaviour should be adopted to adjust the marketing and promoting strategies used by the brand.

fig.1

fig.2

8ConsumerSegmentation

T r a d i t i o n a l l y , T h o r n t o n s customers are somewhat conservative and typically in a age group of over 50 years, they were aware of Throntons when they were young, not completely loyal to the brand but used to buy it, particularly if they were to receive a box of Thorntons chocolate they would quite happily enjoy it. At current they choose the product as a gift for others. A Thorntons’ Easter egg is the be s t a t E a s t e r for t he ir

grandchildren. They don’t particularly like change, and they go to Thorntons looking for the same kind of chocolate gifts as they did thirty years ago. In the article Thorntons in the Future as posted on Chocablog, Dom said “As much as Thorntons might want to develop innovative and exotic new products, it has to be done at a pace that won’t alienate their most valuable customers.” (2009: online)

W i t h t h e c h a n g e o f consumers lifestyle, while Throntons are still keeping a s t r o n g B r i t i s h h e r i t a g e image, its now trying to attract a younger more m o d e r n a n d a f fl u e n t consumer ( Thorntons PLC preliminary result, 2008: online). According to the p r i m a r y r e s e a r c h , t h e q u e s t i o n n a i r e ( s e e t h e Appendix) shows 72.5% aged 16-25 young people out of 39 aware the brand Thorntons, and 65.9% of t h e m h a v e p u r c h a s e d Thorntons products, which revealed that Thorntons is now to target more younger generation. When asked about the words they would like to link to the Thorntons Brand image, over half of respondents chose British,

however nearly the same p r o p o r t i o n o f a n s w e r revealed a playful, tasteful a n d d e l i c i o u s i m a g e o f T h o r n t o n s . T h i s i s a i m p o r t a n t p a r t t h a t Thorntons should develop, make the brand image more various, playful, creative in o r d e r t o t a r g e t m o r e customers.

Keith is a 17-year-old guy and studies at a high school in west New York. He usually gets up around 7: 30 in the morning for his first class at 9. After a quick shower, while waiting for school bus takes him to school he sitting has breakfast prepared by his mom, which always have a cup of full-fat milk, couple of toast with butter and eggs, cereal some times. He likes sweets, especially chocolate. He often takes couple of bars of chocolate to school eats them and shares with his friends on the way to school while he chatting with his friend on the bus. This is the last year for his high school

and he will become a fresher at the college next year. He is a people-person, and always friendly to all his peers. He is really into photography, always take his Canon G12 with him and he got an professional DSLR as well. He is a fan of Apple products, he got a white ipod classic, but now he is using ipod touch to listen to music, and using his iphone to keep him up-to-date with anything new posted on facebook and twitter. He is expecting his mom can buy him a latest iPad 2 as Christmas gift, but actually he is saving money for that.

pen-portrait

9

Positioning

Map

Premium Market

Mid-Low Market

Innovative

Heritage

10Flagship Store Environment

To successful launch the new business in the U.S market, opening a flagship store is necessary and essential for the brand to promote itself and attract more new consumers at a very beginning point.

A s f o r fl a g s h i p s t o r e environment, basically, it should convey the idea of British

Heritage, hence Thorntons will keep its traditional colour, which is orange. On the one hand, orange is representative colour of the brand that can gives American customers a feeling of heritage. Conversely, on the other hand, orange is not conservative as the stereotype of British image. It is a quite fun, playful and energetic colour that

can makes people excited about it, and attract younger generation customers. At the same time, as the flagship store, it will target wider customer group and more tends to focus on promoting its premium range products, tells potential customers Thorntons is a premium chocolate expert. Therefore, the logo at the exterior of the store should be vary eye-catching. It will have a whole dark black background and the label “THORNTONS” will be bright white, as well as showing the manifesto “the Art of the Chocolatier” of the brand. The logo should have a light inside and display a strong

contrast between the colour black and white. In addition, in order to keep a integrative deco of in-store environment, an orange line will cross the exterior logo, to interpret brand colour. To celebrate its 100 years birthday, Thorntons h a s c r e a t e d a s e r i e s o f illustrations, which includes three core sections in different colours, its quite fun, creative and highlighted 100 years of Thorntons history, its indicates Thorntons is a heritage brand but interesting enough, this can be widely used in in-store decoration and window display, definitely will attract more consumers.

The flagship store will be a 2-story structure and the first floor will be a half-build open area which will able to see the ground floor. On the ground floor, there will be a chocolate fountain right at the centre w h i c h c a n b e s e e n immediately when customers step into the store, and it will be free for customers to try it when they hold special event o r g i v e s p e c i a l o f f e r . A independent section will be separate only for display the m a k i n g o f T h o r n t o n s ’ chocolate, and consumer can look how the chocolate been made, and everyone are able to try freshly made chocolate. The show box will be on the wall and show all the range of Thorntons confectionary products in it with lighting detail around the edge of the box. There also will be a cafe

on the first floor, providing a variety of delicate cakes, sweets and ice cream. This area aims to give customers a direct feeling of Thorntons products, brand culture, high quality service which may have a impact on them result in loyal to the brand, and basically a place for resting.

11Communication

StrategyIt is imperative to come up with a s t r a i g h t f o r w a r d communication strategy to make sure a successful and productive launch of the brand in U.S market. Based on the q u e s t i o n n a i r e ( s e e t h e Appendix) which conducted as primary research, 95% people think if Thorntons collaborate with a celebrity chef it will be positive for the brand firmly translate to the U.S market. Thorntons is a traditional British confectionary brand and now moving to America, in order to create a link between the collaboration and the brand

background, the chef is better to be an English and has to be well-know in America at the same time. Therefore, Gordon Ramsay would be the best candidate. He is one of four chefs in the UK maintain three M i c h e l i n S t a r s f o r h i s restaurant, there’s nothing the US respects more than a self-made man, and few have taken control of their own destiny as e m p h a t i c a l l y a s G o r d o n Ramsay. The Times described him “is a bona fide celebrity” in A m e r i c a ( 2 0 0 8 : o n l i n e ) , because his reality show Hell’s Kitchen, and Chef Ramsay

which display on the FOX. Additionally, the result of the q u e s t i o n n a i r e ( s e e t h e Appendix) also demonstrated that 65% respondents believe Gordon is more suitable for Thorntons, and his dynamic and creative character is potentially matching the growing U.S confectionary market.

Thorntons will collaborate with Gordon Ramsay to promote a special product line, which the flavour will be special prepared b y G o r d o n a n d d e l i c a t e l y decorated. Also, the special edition will have a different packaging with Thorntons’ o t h e r p r o d u c t s . T h e c o l l a b o r a t i o n l i n e w i l l b e exclusive for the U.S market, customers will have chance to taste this special chocolate in the flagship store. Moreover, on the day Thorntons launch of the new flagship store in New York, Gordon Ramsay will also be invited to attend. He will make three different desserts w h i c h u s i n g T h o r n t o n s chocolate as main ingredient at launching party. Thorntons will c r e a t e a s p e c i a l p a g e o n Facebook and Twitter for launching of flagship store, by liking and following the page,

five customers will be randomly chose and be invited to the launching party, they will have a great opportunity to try the dessert that freshly made by Gordon Ramsay and a small p a c k a g e o f R a m s a y ’ s collaboration chocolate will be a gift as they attending the party. Finally, the new ad campaign of Thorntons for the U.S market will be released. As f o r s p e c i a l p r o d u c t l i n e collaborate with Gordon, his image will be cast and appear in t h e n e w c a m p a i g n . T h i s campaign will then print on l i f e s t y l e m a g a z i n e s , p o s t outside the flagship store and on the hundreds of billboard all over the New York City.

12. Appendix

13.Illustration1.http://bpando.files.wordpress.com/2011/03/thorntons-07.jpg?w=600&h=381

2.http://investors.thorntons.co.uk/download/pdf/interim_report_Final_2011.pdf

4.http://www.towercentre.com/offers/a-taste-journey-through-europe-with-thorntons-new-continental-boxes/

http://cdn.benzinga.com/files/Hershey%27s%20Kisses%20Chocolate_0.jpg

6.http://www.towercentre.com/offers/a-taste-journey-through-europe-with-thorntons-new-continental-boxes/

7.http://www.towercentre.com/offers/a-taste-journey-through-europe-with-thorntons-new-continental-boxes/

http://investors.thorntons.co.uk/download/pdf/ar09.pdf

8.https://lh4.googleusercontent.com/-k_UyHW0v8dU/TY3Y3NtG-iI/AAAAAAAAAZs/deYRoqQBaoY/s1600/blog1_NED6040.jpg

http://www.bbc.co.uk/iplayer/images/episode/p0094b04_640_360.jpg

10.http://www.archsystems.com/uploadedImages/Projects/Retail/ASI_Flooring/Godiva229(1).jpg

http://www.chocolatefountainsrus.com/sitebuildercontent/sitebuilderpictures/chocolate_fountain_3.jpg

http://24.media.tumblr.com/tumblr_l0to0aXpF71qbc1d5o2_500.jpg

http://www.wayfaring.info/wp-content/uploads/2009/01/6a00d83451e44269e200e5538beaaa8834-800wi.jpg

http://www.johannabasford.com/blog-article/253

11.http://www.marieclaire.co.uk/imageBank/cache/g/Gordon-Ramsay-LP.jpg_e_b531446b815d841fa57ff7ac29559923.jpg

http://media-cdn.tripadvisor.com/media/photo-s/01/28/0d/f4/the-pyramid-chocolate.jpg

https://lh4.googleusercontent.com/-S4wBbZ2dByQ/TXrwtbXUHQI/AAAAAAAAAhA/8lQ5-UYVYMo/flourless-choc-cake.jpg

http://www.purplecircle.co.uk/our-work/thorntons-centenary-branding.html

http://www.purplecircle.co.uk/our-work/thorntons-centenary-branding.html

14.ReferenceVerdict, 2009: online

Super brand, May 2009

market research, 2009:online

market research, 2010:online

packaged facts, 2010: online

market research, 2009:online

market matters, 2010: online

market matters, 2010: online

market matters, 2010: online

Mintel, 2010: online

Mintel, 2010: online

Chocolate blog, 2009: online

Thorntons PLC preliminary result, 2008: online

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