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© IMM Graduate School of Marketing October 2015 Examination ABM401

EXAMINATION : ADVANCED BRAND MANAGEMENT 4 (ABM401)

(OPEN BOOK)

DATE : 27 OCTOBER 2015 TIME ALLOWED : 4 HOURS TOTAL MARKS : 100

MATERIAL SUPPLIED : LINDT HELLO CASE STUDY

INSTRUCTIONS TO CANDIDATES 1. Please refer to the examination rules and regulations as found in the examination

answer book. 2. Answer ALL the questions. 3. Read each question carefully to determine exactly what is required before

attempting the answer. 4. Make sure you discuss the relevant theory for all questions. Do not just

give practical application. Discuss the theory and then apply it to the case study.

5. Number your answers clearly and set them out under appropriate headings and

sub-headings. 6. IMPORTANT: Indicate the questions attempted by drawing a circle around the

question number on the front cover of the answer book. NOTE:

Examination answer books are the property of the IMM GSM and may not be removed from the examination hall.

Answers to examination questions should not include appendices in the form of personal notes to the examining panel.

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© IMM Graduate School of Marketing October 2015 Examination ABM401

Read the attached case study and answer ALL the questions

QUESTION 1 [30] 1.1 Brand portfolio roles serve the function of creating a more optimal allocation of

brand building and brand management resources. Discuss Riezebos, Kist and Kootstra’s model in context of the Lindt chocolate brand. (12)

1.2 Selecting a brand name for a new product is an art and a science. Critically assess whether Lindt considered the six (6) criteria for good naming when it selected the HELLO name for the new chocolate range. (18) QUESTION 2 [26] Brand equity depends on the customers’ experiences over time and their perceptions of the marketing activity of the company. Using Aaker’s model for brand equity, critically evaluate how you believe the launch of the Lindt HELLO range will impact on the brand equity of the Lindt primary brand. QUESTION 3 [14] The Lindt HELLO range has a distinctly different visual and verbal language in relation to all other Lindt products. Critically evaluate and compare the new Lindt HELLO range in relation to other Lindt products by using the three (3) brand properties, namely brand tone of voice, brand symbols and the brand story. QUESTION 4 [14] Lindt HELLO is an extension of the current portfolio of products in the Lindt stable. Discuss the seven (7) hazards of an extension strategy by using the Lindt HELLO product range as the basis for the discussion. QUESTION 5 [16]

5.1 Brand differentiation is key. Apply the four (4) key dimensions essential for brand differentiation, as measured in the Young & Rubicam BrandAssetTMValuator global survey of brand equity, to the Lindt HELLO range. (8)

5.2 There are eleven strategies available to differentiate a brand. Advise which

strategy you believe was used by the Lindt Brand team when launching the Lindt HELLO range. Substantiate and explain your choice of strategy with reference to the Lindt HELLO range. (8)

EXAM TOTAL: 100

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© IMM Graduate School of Marketing October 2015 Examination ABM401

LINDT & SPRUENGLI – A SUCCESS STORY

Swiss chocolate brand Lindt & Spruengli, more commonly known as Lindt, was established in 1845 by David Spruengli-Schwarz and his son Rudolf Spruengli-Ammann. The brand started from a small confectionery shop in Zurich called Spruengli & Son. The Spruenglis later renamed the company after buying the business of Rodolphe Lindt, a chocolatier who invented the first truly melting chocolate. After 167 years Lindt becomes one of the most famous chocolate brands in the world, and its products are distributed to more than 80 countries. The brand entered the U.S. market around 80 years ago, but it maintained a low profile till 1989. Lindt also owns another famous U.S. chocolate brand Ghirardelli, which does not have a prestigious image as Lindt. The brand's flagship products include Lindor Truffles, Lindt Excellence, Lindt Hello and Gold Bunny Chocolate Bars.

Although Lindt positions itself as premium chocolate brand Lindt has become more mainstream since the global economic downturn in 2008.

LINDT TODAY

The generation of profitable growth lies at the heart of the long-term strategy on which the Lindt business model is based. This has proved successful for the past 20 years and is the foundation for further development potential. Lindt’s commitment to quality, drive for innovation and marketing expertise plays a crucial role. These factors are an integral part of a differentiated, forward-looking vision which holds the key to the long-term success of the Group.

Lindt is an international group and are recognized as a leader in the market for premium quality chocolate. They strive for excellence to maximize worldwide market opportunities. They thoroughly understand their consumers, their habits, needs, behaviour and attitudes. This understanding serves as the base to create products and services of superior quality and value. Lindt will never make concessions that compromise their quality of product, packaging and execution.

Their working environment attracts and retains the best people. They encourage, recognize and reward individual innovation, personal initiative and leadership of people throughout the organization. Respect of personal individuality, trust and fair play characterize their working Relationships. Teamwork across all disciplines, business segments and geographies is a corporate requirement to create a seamless company of people who support all others for mutual success. They will develop professionals and facilitate communication and understanding across all disciplines of the organisation.

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© IMM Graduate School of Marketing October 2015 Examination ABM401

Their partnership with their consumers, customers and suppliers is mutually rewarding and prosperous. An in-depth understanding of their consumers’ needs and their customers’ and suppliers’ objectives and strategies enables them to build a mutually rewarding and long lasting partnership.

Lindt want to be recognized as a company which cares for the environment and the communities they live and work in. Environmental concerns play an ever increasing role in our decision making process. Lindt respect and feel responsible for the needs of the communities in which they live.

The successful pursuit of their commitments guarantees their shareholders an attractive long term investment and the independence of the company. Lindt wish to remain in control of their destiny. Independence through their superior performance will allow themselves to maintain this control.

CHANGES IN COMMUNICATION

Lindt & Sprüngli believe a good marketing mix is very important. In-depth knowledge of the markets and consumer habits, regular launches of innovative products, unique point-of-sale presences, and the global high-level brand campaign with the LINDT Master Chocolatiers are the basis for the lasting success of Lindt & Sprüngli, and have made LINDT the world’s leading premium chocolate brand.

A great deal of importance IS attached to product communication. That’s why increasing sums are invested in marketing activities every year. The main focus is on products that are already successfully established in the market. Continuity in communication enables them to build up product brands that will remain strong in the long term, are widely known and have a loyal customer base.

In this age of globalization, any communication strategy has to work worldwide. This has been achieved by the LINDT Master Chocolatiers. In an entirely unique way, they represent The LINDT brand, the premium products, the uncompromising quality, and the company’s all-round expertise in chocolate-making and are recognized by consumers everywhere. The campaign is universally applicable, not only in different languages but also on different platforms such as TV or Print media, at points of sale, at tasting sessions, and live shows in LINDT Boutiques and Chocolate Cafés and at many other events.

COMMUNICATION AT THE PONTS OF SALE (POS)...

At the point-of-sale, products are presented in an eye-catching setting, whether in a shop window or inside the shop and on the shelves. By creating stunning brand worlds, LINDT makes its products stand out effectively from the rest.

... AND BEYOND! Within the framework of impressive sampling activities, the products are being promoted to a large audience. In this way, consumers get the opportunity to convince themselves directly of the fine chocolates.

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DUTY FREE

LINDT products are currently available at over 500 airports worldwide, either in its own boutiques, shop-in-shops or in other points of sale. At the main hubs of Zurich, Frankfurt, Dubai, São Paulo, Rio de Janeiro, and Buenos Aires, LINDT is even the no. 1 brand for confectionery.

GLOBAL RETAIL

In LINDT Chocolate Boutiques, Shops and Cafés around the world, the product range is beautifully presented to display LINDT’s chocolate-making expertise.

BUILDING EMOTIONS

The new millennium has brought changed communication requirements on the part of consumers. The brand has to be shown in a new light. Events of all kinds help to make chocolate-lovers excited about the products and anchor the brand firmly in their consciousness.

GLOBAL BRAND AMBASSADOR – PERSONALISING THE BRAND

Since 2009, tennis champion Roger Federer has been the global brand ambassador for his favourite chocolate, LINDT. He uniquely embodies Lindt & Sprüngli’s underlying values of Swissness, premiumness, quality and passion, and, with his global presence and popularity, he helps to establish the LINDT brand in the main markets. He also takes time to attend various events, giving thousands of LINDT fans sweet moments that they will remember for a long time.

THE DIGITAL AGE chocolate, LINDOR or GOLD BUNNY. With the rise of the Internet, the communication behaviour of consumers is changing radically. Information can be called up from anywhere, at any time. The first LINDT web page went online in 1998. 8% of all searches are made via Google. The search term “LINDT Chocolate” generates more than seven million hits. Search engines are now the starting point for numerous digital enquiries. That’s why Lindt attaches such importance to search engine optimization (SEO) in digital marketing. Above all, this is about improving the listing of strategic key words such as LINDT. In the age of 24/7 shopping, e-commerce plays an important role.

LINDT has seven online stores around the world and is setting up more. This sales channel offers a huge variety of gift items as well as opening up new, innovative channels for buying chocolate.

DIALOGUE WITH CONSUMERS

The new millennium also heralded a new era in communication. With the rise of social media such as Facebook, Twitter and YouTube, one-way communication by companies is being replaced by a dialog with consumers. The consumer plays an active role in this communication, by posting comments on these new platforms and recommending products to others.

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Online banners are an extremely cost-effective way of sharing your passion for chocolate with a community, with the interplay of video and sound ensuring that its full potential is exploited. This format is used to address specific target groups among the next generations which can no longer be reached via traditional channels. Microsites for product brands such as LINDOR or HELLO give Lindt their own web presence, offering a complete product world with comprehensive information, tips, e-cards, and competitions.

Each day, YouTube is visited over two billion times, and counting! With such an overwhelmingly vast audience, it goes without saying that clips from LINDT are to be found there, for example about the new advertising campaign for LINDOR truffles and Lindt Hello.

THE LAUNCH OF LINDT HELLO

In September 2012 Lindt & Sprungli launched a new series of “lifestyle” chocolates called “Lindt Hello”. The product was launched in South Africa in June 2014. This new brand aims to appeal to a distinct customer set.

"Lindt has introduced new brand Hello to help attract a previously untapped younger audience to premium chocolate." "Millennial's untapped in premium chocolate - we are excited about the opportunity to engage millenials, a virtually untapped group in the premium chocolate space, with Hello products on digital and social platforms in stores." "The Millenials, those ages 13 - 31 are the largest group in America."

The millenials consumed less chocolate than previous generations, but could be won over by shareable, interactive experiences and transparency. Lindt has created a site for the brand that encourages young people to share videos and photos on social networks such as Twitter and Instagram.

“Hello appeals to maybe more trendier people than the base chocolate product. We come out with trendier names, trendier packaging, and trendier recipes. We have a strawberry cheesecake variety - nobody had ever heard of strawberry cheesecake in chocolate before – we made one with marshmallows…These are for young people or people who are young in their minds, who want to go out and try something new on an ongoing basis”

The line, which comprises 13 different product offerings, is available in four variants: Caramel Brownie, Crunchy Nougat, Strawberry Cheesecake and Cookies & Cream. In a recent article titled “5 marketing tactics helping premium chocolate sales outpace overall category”, the following tactics were outlined:

1. Flavour innovation – the article states that innovation is key in driving chocolate sales with producers “pushing the envelope toward new flavour directions”

2. Health benefits – producers of premium chocolate are exploiting consumers’ interest in health and wellness by touting the heart and brain heal and anti-inflammatory properties of dark chocolate

3. Increased accessibility – products are more readily available than before

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© IMM Graduate School of Marketing October 2015 Examination ABM401

4. Smaller portions for less – marketers of premium chocolate are building brand loyalty and an appetite for higher priced chocolate among the young consumers

5. Marketing indulgence – a tried and true driver of premium chocolate is marketing campaigns that position chocolate as a “self-reward”

The concept behind the launch, Lindt said, is to appeal to a "fashionable" target market. The range will be rolled out to other unspecified markets at a later date, the confectioner said.

Lindt Brand Positioning

The process of positioning Lindt as a premium chocolate brand started in 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 than their Swiss rivals Suchard or Cailler.

From their corporate slogan / logo strapline “Master Swiss Chocolatier since 1845” once can easily extrapolate Lindt’s current brand attributes:

1. Mastery of the techniques of chocolate production,expertise hence high quality 2. Origin of the brand in Switzerland, as prestigious for chocolates with their

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

Hello Positioning

The Rapp agency’s press release spells out who they imagine to be a typical HELLO customer:

“Our client Lindt & Sprungli, the premium chocolate manufacturere, 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”.

The removal of “Swissness”

The most striking think about Lindt HELLO is the removal of any reference to Switzerland. Swiss goods and services enjoy an excellent reputation worldwide. They are seen as representing quality, exclusiveness and reliability. This reputation enables goods of Swiss origin to be positioned in higher price brackets.

The head of Lindt Germany, Dr Adalbert Lechner sees Lindt HELLO as a global product for a smaller, more interconnected world.

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© IMM Graduate School of Marketing October 2015 Examination ABM401

“Why is Lindt heading in a new direction? The world is changing at a 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 jet-set, on condition that they have friends to take them to the airport and taxi fares these days are more costly than plane tickets to London. Hello conveys a feeling of urban living”

Hello Product Description

In the hello range of products includes:

Bars: The HELLO bars are not your ordinary candy bars. The ten luxuriously filled squares that make up each bar – each covered in irresistibly smooth premium chocolate – are bite-sized packages of delight for your taste buds

Sticks: The Lindt HELLO sticks are trendy treats designed for chocolate-lovers on-the-go. With six tasty squares you can savor one by one or eat all up at once, the sticks are just the right size for satisfying those afternoon cravings

Mini Stick bags: Available starting in August 2013, each bag is filled with individually wrapped, bite-sized Mini Sticks of chocolate filled with one of four mouthwatering flavors

Chocolate Bits box: A colorful box with nine melt-in-your-mouth pralines in fun shapes like hearts and speech bubbles in Caramel Brownie, Cookies & Cream and Crunchy

Thank You box: An eye-catching gift box filled with four pralines in Caramel Brownie, Cookies & Cream and Crunchy Nougat, all in playful chocolate shapes

Ultra-Thin Chocolates: Irresistible, wafer-thin Caramel Brownie or luscious Vanilla chocolate pieces

Chocolate Delights gift box: Each box is filled with round chocolate treats that are the perfect union of luscious milk chocolate and Cookies & Cream or Crunchy Nougat

The key flavours are Caramel Brownie, Cookies & Cream, Strawberry Cheesecake and nougat Crunch (colour coded orange, yellow, red and blue respectively).

"With eye-catching packaging, popular flavor combinations and a unique brand personality, Lindt HELLO redefines what premium chocolate can look and taste like," says Thomas Linemayr, CEO and President, Lindt USA. "We are excited about the collection and the opportunity to engage Millennials, a virtually untapped group in the premium chocolate space, with the HELLO products on digital and social platforms and in Target stores."

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© IMM Graduate School of Marketing October 2015 Examination ABM401

Engaging Chocolate Lovers with HELLO

Knowing that technology has created so many new ways to say "hello," whether through text, blog post, or tweet, Lindt is giving consumers a chance to meet the new collection on a variety of digital platforms, including a dedicated microsite on LindtUSA.com/HELLO. From the microsite, consumers can enter the Lindt Say HELLO Like Never Before sweepstakes by posting the "#LindtHELLO" hashtag on their social media sites. Consumers have the chance to win prizes daily and monthly, such as $1,000 cash or gift cards from iTunes, American Express, Target and more. To enter, consumers can:

Tweet or share a Vine video using #LindtHELLO Post a photo on Instagram using #LindtHELLO Log on to LindtUSA.com/HELLO and send a virtual "hello" via the microsite

The microsite will also feature information about the collection, and live stream tweets, Instagram photos and other social content from consumers saying "hello".

Branding Design - 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. Lindt due to its “luxury” appeal was finding it challenging to compete with mass market brands (in South Africa these brands include Cadbury and Nestle) and still remain premium. Lindt Hello is the answer to this as it gets personal, engages with the consumer and tells a story.

It is important to note that the Hello packaging differs significantly from Lindt’s usual, elegant design. As a result this raises important questions about how the new product line fits into the company’s overall business strategy and its possible effects on Lindt’s corporate brand.

With the creation of this brand, a new dimension in marketing communication for premium chocolates has been introduced and directs at a new life-style oriented target group.

By creating this new packaging design, Lindt are paving new ways in merchandising of premium chocolates. “Hello” – each product introduces itself to the consumer in a sympathetic and personal way. The message: for everyone considering life-style as personal statement, there is a chocolate to match.

The packaging speaks for itself: English manner of speech, bright colors, unusual typography and memorable product names are ingredients of the new brand. With “chocolate that talks to you”, Lindt succeed in laying the groundwork for innovative measures of communication and a successful market entry.

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© IMM Graduate School of Marketing October 2015 Examination ABM401

As the standard range always comes in a black dress, the summer edition is designed in white patterns. Both are always completed by super brilliant and metallic brand colors which are ennobled by UV lacquer. Thus the images of the ingredients will attract your attention due to its embossing finish, while the Logo values the concept with its hot foil stamping. This strategy was crowned by great success.

Sources:

Crawford, E., 2014. 5 Marketing Tactics helping premium chocolate sales outpace overall category. [Online] Available at: http://www.foodnavigator-usa.com/Markets/5-strategies-helping-premium-chocolate-sales-outpace-overall-category [Accessed: 21 May 2015]

Heptonstall, S., 2013. Case Study the introduction of Lindt HELLO. [Online] Available at: https://www.behance.net/gallery/14252285/Lindt-Hello-Case-Study [Accessed: 21 May 2015]

Lindt-Sprüngli. (n.d.) Available from: http://www.lindt-spruengli.com/ [Accessed 1: June 2015]

Wong, H., 2012. Do You Dream in Chocolate? A Case Study on Lindt's Branding Strategies Before and After 2008. [Online] Available at: https://www.american.edu/soc/communication/upload/Helen-Wong.pdf [Accessed: 21 May 2015]

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Lindt Chocolate Range

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Lindt HELLO range

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© IMM Graduate School of Marketing October 2015 Examination ABM401