Chapter 7- Business Marketing

Godiva Chocolatier: When Social Media Speaks, Godiva Listens

Posted on | September 27, 2010 | 17 Comments

Author Stephen Baker

Amid recessionary belt-tightening, chocolatier Godiva listens to an invitation-only social network to understand what women want. When the economy swooned last fall, executives at Godiva Chocolatier faced a vital concern: How would financial jitters and shrinking stock portfolios affect the market for their luxury chocolates? For answers, the New York company turned to 400 bona fide chocoholics in its online social network. It’s a Web site with an online forum. But attendance is by invitation only, and the discussion revolves around things chocolate. Through autumn and winter, as Lehman Brothers collapsed and the government scrambled to save the automakers, Godiva was busy pumping the participants in its social network for intelligence. Specifically, it wanted to know what types of products and promotions would help protect a place for premium bonbons in consumer budgets. The feedback: Advertise bargains, especially baskets of chocolate that cost less than $25. “People are budgeting, and they want to budget chocolate,” says Rich Keller, the company’s director for marketing and innovation.

Little Luxuries Mean a Lot

The Godiva community also called for luxury in small doses—goodies they could pick up for not much more than the price of a cappuccino. One winner during the all-important Valentine’s Day season was a heart-shaped chocolate lollipop that sold for $5.50. “It was a key winner for us,” says Keller. Godiva sales have slowed, he adds, but they’re still growing. Companies are increasingly looking to social networks for a 24/7 read on shifting consumer sentiments. The advantage over traditional market research? Unlike focus groups, which disband after an hour or two, Web communities stay engaged for months, or even years on end, letting companies track attitudes over time. Another plus: Participants, often devotees of a company, product, or service, work nearly for free. Godiva rewards its active community members with $10 gift certificates every month—not even enough for a couple of chocolate lollipops.

Algorithms Don’t Always Track Consumer Tastes

The online world offers plenty of other options to gauge customer response to promotions and brands but Godiva counts largely on its networked chocolate lovers—all women. Many of them log onto the site daily. Women tend to be more passionate than men about chocolate, and they express themselves more freely in the communities, Godiva’s Keller says. (The company uses surveys to reach out to men, who tend to buy chocolate mainly for the women in their lives on Valentine’s Day.)The female forum members chat frequently among themselves, swapping insights about chocolate, the economy, and whatever themes moderators raise. The 400-member group has been going for nearly a year and will soon be shutting down. In its place, Godiva plans to launch two new 300-person communities, one for Godiva customers, and the other for fans of other premium chocolates.

By Invitation Only

To populate the new communities, Godiva sends out 30-question surveys to people on its customer lists. After studying the responses, they issue invitations to a select group.The payoff for the chosen? In addition to receiving their monthly coupons, participants get to chat with others about a food they love—and to help steer the market for premium chocolate. When they speak, Godiva listens.

Stephen Baker is a senior writer for BusinessWeek in New York.

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From a customer's Perspective

"Twelve years ago, on a crisp fall morning like this one, I would have been on a train from Manhattan to Westport, Connecticut, chatting with my friend & co-worker, Sarah. When we reached our office, I would have gone to work on Pepperidge Farm cookies, and a few desks away, Sarah would begin her day on Godiva chocolates. That’s right: at the time, Pepperidge Farm & Godiva were both subsidiaries of the Campbell Soup Company. And while Sarah & I always had plenty to talk about on our long train rides out of New York City, we never once dreamed that her specialty chocolates would be sold in the same supermarkets as my cookies & crackers. Never. How times have changed. Campbell’s sold Godiva in 2008, and by last fall, the new owners announced the introduction of ‘Godiva Gems’, a line of individually-wrapped chocolates offered at supermarkets & drugstores nationwide. It’s taken nearly a century to build the mystique of the Godiva brand- - so why would anyone risk tarnishing that high-end image through low-end distribution channels? According to published reports, Godiva wants to add an “everyday” appeal to its chocolates. Now that Godiva Gems are widely available in supermarkets & drugstores, the marketing team hopes that chocolate lovers will be more likely to consume these items themselves rather than passing them along to others. The team also hopes that if Godiva Gems can attract a new group of consumers during these challenging times, some will eventually ‘trade up’ to the premium offerings sold for as much as $480 at Godiva’s 450 retail boutiques. After all, look at what Starbucks has done, selling pre-packaged coffee in supermarkets throughout the US. Consumers can go to a grocery store to buy basic Starbucks blends for in-home consumption, but if they want specialty drinks like Frappuccino & Cinnamon Dolce Lattes, they still need to visit to an actual Starbucks location. But let’s take a moment to think that through more thoroughly: even the most extravagant Starbucks drink won’t set you back more than six dollars, and for all its premium pricing, Starbucks has never, ever played in the ultra-luxury gift market. On the other hand, for almost a hundred years, Godiva’s business has been built around one thing, and it isn’t premium chocolate. No, Godiva sells the same thing as Tiffany’s: sweet nothings whose packaging is designed to speak VOLUMES about the status of BOTH the purchaser and the receiver. That’s because luxury is an elusive concept. To me, luxury is the perception of quality… sold through aspirational stories… whispered to the deepest parts of our psyches.  And because luxury has such cache and profit potential, it has always held a special siren song for marketers. But luxury is a game that can only be played by the world’s best poker players. You can never blink. You can never flinch. You can never break a sweat. Once you sell your story, you’re ‘all in’, and if you waver for a moment, the house of cards built on the consumer’s willingness to believe will collapse, and the game will be over for your luxury brand. Godiva shouldn’t be selling chocolates at Kroger any more than Tiffany’s should make a move into Wal-Mart. All rationalizations and wishful thinking aside, “mass” and “class” have always been mutually exclusive marketing concepts, and always will be."