Jeff de Bruges in California

Jeff de Bruges in California Rami MKTG 445 Table of Contents Introduction………………………………………………………………………………………………3 Jeff de Bruges Description………………………………………………………………………….. 4 US. Market………………………………………………………………………………………………5-6 Political Environment………………………………………………………………………7 Cultural and Social Differences…………………………………………………………8 Study of the Economic Market…………………………………………………….. 9-10 Competition………………………………………………………………………………10-12 Jeff de Bruges Customers……………………………………………………………12-13 Marketing Plan………………………………………………………………………………………….. 14 Marketing Mix……………………………………………………………………………14-15 Marketing Strategy……………………………………………………………………. 7-18 Summary………………………………………………………………………………………………….. 19 Conclusion…………………………………………………………………………………………………20 References…………………………………………………………………………………………………21 Appendix…………………………………………………………………………………………………… 22 Introduction: As it is known today, many companies from all over the world are seeking to enter foreign markets. European, Asian, and American markets are becoming very attractive. Due to the globalization concept, individuals and businesses are expanding not only in their local countries but outside as well in order to become bigger and make more profits.

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The following report will give an idea about the well known “chocolatier” Jeff de Bruges and its expansion plan in the U. S market and exactly in California. The memo will include an overview of the company as a whole. In addition it will study the American market and the consumer. After providing all the necessary data about the market, a marketing plan will be discussed according to the environment. Finally a brief conclusion about the expansion strategy will be elaborated.

In order to complete the following report a lot of research was conducted, it mainly included secondary data, since it was difficult to get primary data from key managers due to the location of the main store in France. Jeff de Bruges Description: The Belgian chocolate brand Jeff de Bruges was founded in 1986 in France. It was known for the best quality chocolate in the market and was competing for other known brands. After about 23 stores where opened in different countries such as: Spain, Tunisia, Morocco, Algeria, Italy, Arab Emirates, and the list goes on; today the company has 240 shops growing continuously.

In addition to chocolate, truffles, and pralines Jeff de Bruges produces and offers a wide variety of dragees (almond candy) during the summer in order to serve customers who are planning for their weddings. Jeff de Bruges is today known for its best quality chocolates as well as its attracting gift-wrapping and has won many rewards. The company is serving about 50 different kinds of chocolates for different seasons and occasions such as Christmas, new year, Valentine’s Day, Easter, weddings and so on. Since Jeff de Bruges’ stores are opened in different countries, it will be a great idea to open a store in the U.

S. The following pictures show the product line that the company offers to its clientele. Expanding in the U. S: Since the company is seeking to expand in different foreign markets, it would be a good idea to consider the U. S market. As Americans interest toward purchasing high-end products especially European brands, chocolate is an important part of this trend. The consumer today is becoming more aware of the foreign brands of chocolate due to the franchises that are all the time entering U. S markets such as Godiva, Leonidas, and so on.

People are more concerned to different brands, they are able to search each brand and know about chocolate through the Internet, magazines, advertising, and other means. In addition consumers are able to travel and taste different kinds of chocolate, therefore they have an idea about the chocolate types and tastes available in the market. According to the book “The global marketing “, franchising gives the ability to transfer a company’s know-how to new markets. So opening Jeff de Bruges as a franchise will be a great for both the franchisor and the franchisee since it will bring more profits and brand recognition to both parties.

Researches show that the chocolate market is very fruitful and it will be in the coming years. Premium chocolates continue to be the star in the confections industry, contributing the majority of growth in the chocolate category. Research from market research firm Mintel shows sales of premium chocolate increasing 129 percent from 2001 to 2006, when it reached $2. 05 billion – about 13 percent of the total chocolate market. Mintel’s forecast for the premium chocolate market shows growth of 73 percent in current terms and 53 percent in constant terms over the next five years.

Total premium chocolate sales in the U. S. are forecasted to reach $3,554 million by 2011. (http://www. gourmetretailer. com/gourmetretailer/trends/index. jsp) In addition, franchising is more encouraged in the retailing industry as a market entry mode. So before talking about Jeff de Bruges franchise, marketers should consider some important points such: consumers, competitors, government, supplies, location, and so on. These points will be discussed along the report. The U. S Market: The U. S market is an excellent opportunity to consider while opening a franchise.

It includes different kinds of consumers from different backgrounds and cultures. The purchasing power is pretty great in comparison to other foreign markets. Also chocolate tend to be a valuable product among people and there are many occasions or seasons where these people consider buying chocolate. As known, Americans are always looking for the best quality in the market. They tend to look for the greatest products even at a higher cost. So the market could be very attractive to many investors and foreign companies. In order to learn more about this market, some important points will be discussed thoroughly. American Political Environment: The US is the oldest continuous democracy in the world. It was established in 1789. The US is a Federal system, which means that the power is divided between a central/national government and the 50 States. The Federal Government has three branches/arms: •Legislative Branch (house of representatives and senate) •Executive Branch (the president, the cabinet, the federal departments and agencies) •Judicial Branch (the supreme court) The federal government takes all the necessary initiatives to ensure the growth and stability of the United States.

The US government makes full use of economic tools such as money supply, tax rates, and credit control, among other things, to adjust the rate of economic growth. For the most part, the US Federal Government also regulates the operations of private business concerns in order to prevent monopolies. •Cultural and Social Differences: Americans tend to be more informal and casual than any other countries. For instance, comparing the Americans culture to the Moroccan culture, the second one tend to look more on how people are dressed which automatically reflect their social class.

On the other hand, the Americans tend to wear more casual clothing especially when they are shopping to feel more comfortable. So marketers need to take this into consideration. Also, Americans tend to like high quality products, they usually prefer to taste something before buying it or have samples. In addition, good service, which include greeting when coming to the store, smiling, asking them questions about their wants and needs, is extremely important to bring a great atmosphere to the experience of buying chocolate as a whole.

Giving gifts in different occasions throughout the year is part of the American culture such as Christmas, Valentine’s Day, Easter, Mother’s Day, and many other occasions, so chocolate during these occasions is very popular. Consumers are now more educated, more sophisticated and more willing to spend extra dollars on premium chocolate. •Study of the American Economic Market: The largest and still the most important market in the world, the United States of America’s economy is driven by consumers but is troubled by high debt levels. The United States of America has the world’s largest economy.

According to the CIA World Factbook, 2007 GDP is about $13. 84 trillion. This is three times the size of the next largest economy, Japan, which has a GDP of $4. 4 trillion. US dominance has been eroded however by the creation of the European Union common market, which has an equivalent GDP of over $13 trillion, and by the rapid growth of the BRIC economies, in particular China, which is forecast to overtake the US in size within 30 years. The recent failure in the US housing and credit markets has resulted in a slowdown in the US economy. 2007 GDP growth was estimated at 2. 2% but in 2008 it is projected to be just 0. %, down from the 10-year average of 2. 8% (see chart below). In common with most developed countries, Services is the key sector of the economy. In 2007, services made up 78. 5% of GDP, industry 20. 5% and agriculture less than 1%. Around two-thirds of the total production of the country is driven by personal consumption. Although the US is often referred to as a free market economy, since there are government regulations protecting certain sectors? The US consumer is also a big driver of global economic activity. The trend of the real GDP growth rate of the US economy is shown in the following graph. http://www. economywatch. com/world_economy/usa/) •Competitors: There are many chocolate stores that are available in the U. S market, but the report will be focusing on the companies that mainly sell luxury or premium chocolates. These competitors are Godiva and Leonidas. Leonidas: It is a world-renowned chocolate maker, selling over 100 different kinds of Belgian chocolate through 1,400 outlets around the world. Leonidas guarantees the freshness and quality of its chocolates. They are always made according to traditional methods, using only the finest ingredients. 100% pure cocoa butter for the coating.

Natural ingredients like fresh butter, fresh cream. And delicacies such as hazelnuts from Turkey, Morello cherries from the Perigord, almonds from Italy and walnuts from Grenoble. In short, the finest ingredients the world has to offer. The founder, Leonidas Kestekides, built his company around strong principles. Godiva: According to the company’s website, Godiva Chocolatier was founded 80 years ago in Brussels, Belgium when master chocolatier Joseph Draps founded a chocolate company that was named in honor of the legend of Lady Godiva. As the company was growing, it expanded internationally such as France, Italy, Germany, U.

K, and the U. S. Today there are 275 Godiva stores around the U. S; as a result the Godiva Brand has become a well-trusted brand among the American shoppers. So according to the information about the competitors, it is very challenging for Jeff de Bruges to operate in the chocolate industry. But as the premium chocolate market is growing and more people are shifting to such chocolate and to more European and brand name products and services, there is a large opportunity for the company to create a well-respected brand name is the consumer’s minds. Therefore the company should learn from the competitors who have experiences with the U.

S market in order to build a strategy that will makes it the most successful brand in the premium chocolate area. •Jeff de Bruges Customers: As stated before, people tend to give chocolate boxes in many occasions. Chocolate is America’s favorite flavor, according to recent surveys with a little over 50% of adults preferring chocolate to other flavors. So the customers tend to be mostly adults and professional that likes all about the European goods and services, and like the European lifestyle. This group of people like to travel and experience other foods and wines and different lifestyles.

They tend to read a lot about different products and they can spend a lot of money in getting the best quality products and services. Another group of Jeff de Bruges is seniors that have enough money, they already have been traveling around the world and they already know about the European lifestyle. They are very attached to celebrating each occasion and fine chocolate is a precious gift to give. Also young children starting the age of 14 began changing preferences toward chocolate rather than candies. They can be a good influence to their parents. Finally, the corporations can be also a part of Jeff de Bruges clientele ‘s list.

These corporations give chocolate boxes to their employees and customers during holidays, as well they tend to organize big events and they can consider Jeff de Bruges as a chocolate provider for them. This category could be very profitable since they make large volume orders. All these target markets can be appealing to Jeff de Bruges Company. By knowing the right customers and their wants and needs the organization can prepare the right marketing plan to reach all these categories. As a summary, the premium chocolate industry is still growing within the U.

S; the market is becoming very profitable since more Americans are now open to the European culture and lifestyle and they have a great respect of the European goods, services, and brands. The following section will provide the strategy of how the company should market itself within the U. S market. Jeff de Bruges Marketing Plan: Before entering the U. S market, the company should carefully study the market and the industry as a whole in order to operate efficiently. There are many sources where the company can get the data such as Global Market Research Reports, which provide useful information for investors.

Then the company should be studying the market and the target audience through surveys, interviews, through events attendances, websites number of visits. All this gathered information is a good tool to analyze the industry, the U. S market, as well as the customers. When investors have an idea about all these areas, they should focus on Jeff de Bruges franchise requirements to start working on a suitable strategy for the U. S market. A detailed information about franchising is provided in Appendix A. •The Marketing mix: In order to start Jeff de Bruges franchise within the U.

S marketers need first to develop the following marketing mix. This model helps a lot to well position the company within the U. S market. The following section will give more details about each component of the last model. 1)Product: Jeff de Bruges will be selling different kinds of chocolates and almond candies for all the occasions. These chocolates and candies are well wrapped according to each event. In this case the product is important but how the product is packaged and presented to the consumer is extremely significant. 2)Price: since it is a franchise the prices will be according to the mother company.

The following prices are set according to many factors such as currency exchanges, taxes, and other price considerations. The following table shows the classification of each price according to the weight. 150g12-14 chocolates$18. 90 250g19-21 chocolates$31. 50 375g27-32 chocolates$47. 25 500g38-42 chocolates$63. 00 750g56-63 chocolates$94. 50 1kg73-83 chocolates$126. 00 1. 5kg111-125 chocolates$189. 00 Source: http://www. jeffchocolates. com. au/OurClassics. aspx 3)Place: since investors are opening Jeff de Bruges store, they should consider the best location in order to operate efficiently.

In this case the location of the store is really an important aspect of the marketing strategy. So, as a marketer the best place to open this store, is South Coast Plaza Mall in Costa Mesa? Why exactly this mall? Here are some important facts about this specific shopping mall that would make this location the most attractive to open a European franchise. South Coast Plaza includes a collection of over 280 boutiques and department stores, many exclusive to California, attract visitors from around the world.

The center continues to prevail as one of the nation’s most luxurious shopping destinations for fashion, home furnishings, spa services, dining and more. Many South Coast Plaza restaurants receive top honors in the annual Zagat Survey. It is located close to San Diego Freeway (405). It is ranked the highest grossing planned retail center in the United States, with annual sales over $1. 2 billion with visitors over 25 million annually. The mall opened in March 1967, with nearly 2. 8 million sq. ft. of retail and dining, and approximately 12,750 parking spaces, including five valet stations .

Since the shopping center consists of many recognizable brands such as Cartier, Louis Vuitton, Chopard, Burberry, and other big name brands, Jeff de Bruges can also join the brands lists. 4)Promotion: this is also a very important part of the marketing strategy. Promoting the product is very helpful to make it known in the consumers’ minds. Since our target audience has great access to different means of media and technology, the company can create advertisings and promotions in order to attract more customers. There is different feasible way to reach the American consumer. •The Marketing Strategy: Direct Marketing: Jeff de Bruges can redesign its website to help consumers with a host of new features and tools which will ensure that the shopping experience is easy and enjoyable as possible. For instance, they customize their website for the customer to make easy chocolate orders, they can provide information about new products, new promotions and discounts. •Word-of-mouth: The use of blogs and twitter is very powerful to spread the word among targeted markets. They can help interact with customers easily and share information about the products, the company, and the industry as a whole.

For instance, Jeff de Bruges customers can post their reviews, comments, opinions, and all the information related to chocolate. This is an efficient way to keep in touch with the current customers as well as to attract potential buyers. •Personal Selling: This is an important element of the promotion strategy since it is not a one-time purchase, the customer would want to come back for other purchases in the future. The company should ensure that its employees are educated about their products and they know each component of manufacturing the chocolate Personal selling is a form of communication between two people or groups.

It is very important to the growth of the company, because once the customer has a good experience with the personnel in a specific store a relationship is automatically built. Generally personal selling provides a good relationship with prospective customers in order to provide future sales in future occasions and events. •Events and experiences: Experiences will help increase awareness of Jeff de Bruges products. Samples: can help customers try different varieties of chocolates and choose the ones that they like the most.

Events: the company can attend chocolate events such as the Los Angeles Luxury Chocolate Salon in order to create more brand awareness among visitors and attract more potential customers. Summary: The premium chocolate market is a good opportunity for investors to consider in order to expand. Since Jeff de Bruges is not expanding in the U. S , it will be a great idea to bring this brand to the American consumer. Sine Jeff de Bruges’ brand is well known in many location in the world, customers already have established a brand image for Jeff de Bruges.

Since the U. S is a mixture of cultures and people, it is a good opportunity to expand within the states. Once the brand image is strong in the consumer’s minds, other stores can be opened within the country. Franchising will always be a good strategy to consider since the company shares the know how, the training, and all the necessary tools to start this business. The main important point is that Jeff de Bruges needs to provide the best service, the best product to its consumers since they are always looking for the best quality products.

Once all these points are taken into consideration, Jeff de Bruges will be ready and powerful to compete with other brand names such as Godiva and Leonidas, and many other chocolate stores. Conclusion: Considering all the points discussed above, Jeff de Bruges will be a good and profitable franchise. In order to succeed, the company should study the overall market characteristics in details such as : knowing their customers, their competitors, the U. S environment, and other valuable considerations that would help the company to conduct its business in a different market efficiently.

Therefore franchise is a great opportunity for the company to expand more internationally in order to keep its superior quality chocolates as well as its great gift boxes, and the whole atmosphere of the store to attract its target audience References: •(2004). Four Principles of the Marketing Mix, retreived Mai, 2nd, 2009, from http://www. provenmodels. com/13/four-principles-of-the-marketing-mix/mccarthy •(2008). Godiva, retrieved Mai, 8th, 2009, from http://www. godiva. com/about/faq. aspx •(2009). The Gourmet Retailer, retrieved April, 24,2009, from http://www. gourmetretailer. com/gourmetretailer/trends/index. sp •(2007). Interesting Chocolate Statistics, retrieved April, 24th, 2009, from http://www. buzzle. com/editorials/6-5-2005-71085. asp •(2008). Leonidas, retrieved April, 28th, 2009, from http://www. leonidas-chocolate. com/madisonave. html •(2008). Overview of the United States Political System, retrieved April, 28th, from http://www. australianpolitics. com/usa/overview/ •(2006). South Coast Plaza the Ultimate Shopping Resort, retrieved Mai, 4th, 2009, from http://www. theoceanfrontca. com/pdf/shopping_southCoast. pdf •(2008). The U. S. Economy, retrieved Mai, 8th, 2009, from http://www. economywatch. om/world_economy/usa/ •W. K. , & M. G. (2005). The Global Marketing Mix. Global Marketing (p. 418). Singapore Appendix: Appendix A: All about Jeff de Bruges Franchise What can the Jeff de Bruges franchise do for me? It brings a global concept of retail architecture and merchandising ensuring perfect brand unity and recognition not to mention a very pleasant and dynamic working environment. The Jeff de Bruges franchise means also having a renowned and reputable brand. It brings know-how and innovative marketing and constantly supplies the creative input required inflecting positive evolution to the brand and ranges.

Consumers’needs and behaviours change constantly and one of the essential roles of a brand and its management is to be a catalyst for this positive evolution.. When one comes from outside of the industry, how long does it take to learn it all? Each new franchisee attends an initial 4 week training session at which all of the different subjects are taught through alternating theory with practice. The subjects include product knowledge, merchandising techniques, selling techniques, management and marketing. Additional training seminars are scheduled throughout the year to improve performance in given areas.

Various meetings are also planned including those of the Advisory Council, product workshops, work-in-progress commissions and regional and national seminars. All of these events bring people together encouraging interaction and the sharing of ideas. We consider continuing education as one of the main thrusts of our development. In order for each franchisee to be able to improve skills and gain new ones we have created the Jeff de Bruges Training School. This allows us to offer training courses which are 100% adapted to the needs of our network.

In addition, we provide technical and logistical assistance during the set-up and opening of the shop and carry out personalised follow-up including visits on a regular basis, telephone assistance and regional and network-wide meetings. What is the surface area needed for a shop? One of the strengths of our concept is to be able to adapt to small shops. For a high street shop the surface should be around 30 to 40m2 plus a minimum of 25m2 of storeroom space. In shopping centres, the concept requires a minimum of 40m2 but it can be adapted in the form of an 18m2 central kiosk. Both require a minimum of 25m2 of storeroom space.

How much is the Jeff de Bruges franchise fee? In France, the franchise fee including training fees and engineering fees is 16,000 ? a. Outside of our home market, the initial franchise fee will vary according to the type of contract (master or franchise) and according to the country covered. What is the initial investment necessary to set up a Jeff de Bruges shop? Excluding real estate or lease, the necessary investment for an average high street shop is approximately 70,000 ? a. Construction and shop fit-up costs depend greatly upon the state of the shop at purchase. For a shopping centre, construction and fit-up costs can be from 80,000 ? to 140,000 ? a excluding real estate, lease costs or entry fees. What is the minimum personal equity needed for the project ? In order to avoid cash flow problems that might be created by having too high of a loan payment we require a minimum of 40% personal equity of the total project (incl. real estate, entry fees, construction costs, shop fitting costs, etc… ). What is the average turnover of a shop? Here again, the turnover depends upon the shop’s location on a high street or in a shopping centre. For example, a high street shop in France can generate revenues from 180,000 ? a to 380,000 ? a excl.

VAT with a product mix of chocolate, dragees, and ice cream during the summertime. A store in a shopping centre with the full range of chocolate, dragees, ice cream and pick-n-mix sweets can have sales ranging from 220,000 ? a to more than 800,000 ? a excl. VAT. And how about the profitability? Several factors are to be taken into account. First of all, gross margins for chocolate and dragees can tally up to 55%. For ice cream, gross margins range between 56 and 80% depending on the system used. Secondly, the low level of stock required prevents cash from being tied up in unproductive dormant stock.

The turnover of stocks is thus quick, there are no mark-downs or sale periods necessary and there is almost non-existent loss from spoilage or breakage. A well prepared and managed project should see a return on investment within five years. Do franchisees have to pay royalties? Several factors are to be taken into account. First of all, gross margins for chocolate and dragees can tally up to 55%. For ice cream, gross margins range between 56 and 80% depending on the system used. Secondly, the low level of stock required prevents cash from being tied up in unproductive dormant stock.

The turnover of stocks is thus quick, there are no mark-downs or sale periods necessary and there is almost non-existent loss from spoilage or breakage. A well prepared and managed project should see a return on investment within five years. No, there are no royalties whatsoever with Jeff de Bruges. There is a however an advertising participation fee which helps to pay advertising expenses. It is set at 2% of sales excl. VAT with a minimum of 3,300? a per shop annually. Do you provide assistance to the franchisee in the search for the future shop location? Naturally, since the choice location is of fundamental importance.

To ensure success, the choice of location must be in perfect harmony with our products and our target market. We look for locations in the mid to upscale high street locations with high pedestrian traffic in towns with a population of over 30,000 as well as locations in shopping centres. As a member of PROCOS, which is a federation of speciality retailers for urban development and planning, we have studies of most of the high street sites and shopping centres in major cities. In the same manner, for existing shops which are sold as a going concern, we assist the candidates in the different steps of their project.

Is Jeff de Bruges a member the French Franchise Federation? Yes. We have been members since 1988, and this membership is an important one for us since the role of the F. F. F. is to inform and to guide future franchisees as well as to enforce the code of ethics of the profession. In addition, our franchise contract has been reviewed and given approval by the Federation. The contract is a 5 year renewable contract that states the obligations of both partners who enter into the agreement namely what Jeff de Bruges is required to provide to the franchisee.

It defines, among other things, the boundaries of the exclusive territory awarded to the franchisee. Do you work with an architectural design firm? Yes. Our architectural design firm ensures the integrity and cohesion of the concept for the entire network of shops. They draw up plans for each project individually. The approved layout is then made available to each franchisee’s shop fitter allowing him or her to apply for the necessary permits and to proceed under his or her own responsibility. Our architectural design firm validates the final specifications. The franchisee is of course free in the end to choose the shop fitter.

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