Recently I picked up a small box of Godiva truffles to share with my spouse.  What a disappointment.  They were hard and the flavour was inferior.  At a price of $3.33 per truffle I felt I had been ripped off.  You see, truffles from Eitelbach at $1.50 per truffle are heaven in a box.  Their truffles are fresh and they offer a nice variety of flavours.  Soma offers its truffles at $2.00 per and are also excellent.

With other better quality truffles available, how can Godiva sell theirs at premium prices?

Godiva is held by a Turkish confectioner Ülker Bisküvi Sanayi, who purchased the company in 2008 from Campbell Soup which previously held it for 40 years.  Eitelbach Baumkuchen Pastries Ltd. is a small Toronto based privately held company opened in 1989 and has two retail locations and an on-line store shipping to Canada and the US.  Soma Chocolatemaker is owned by David Castellan, a former executive pastry chef at Oliver Bonacini restaurants. It opened in 2003 and has one retail location in Toronto’s Distillery District and online ordering shipping in Canada only.

How does Godiva do it?

The majority of chocolate consumers do not eat fine chocolate on a regular basis, if at all. So when it comes to special occasions or communicating thoughts of affection, Godiva is seen as a safe bet.

So why did I purchase the Godiva truffles?  This was a spur of the moment purchase, with no Soma or an Eitelbach in the vicinity and no time to order from their websites.   I relied on my perception of Godiva chocolates, the perceived perception my spouse would have, and the reassurance that the higher price provided that I was buying quality chocolate.

But because I have tasted quality chocolate, I knew instantly on tasting the Godiva truffles that I had been had.

That is the key to successful marketing – having customers believe a desired attribute about your product.  We believe that Godiva, Soma, and Eitelbach offer quality truffles.  In the latter two cases I believe it to be true because I’ve tasted them and know they are good quality chocolate.  In the case of Godiva, I was relying on truth in marketing and appropriate pricing. 

I would liken Godiva’s strategy to Starbucks’ (see post “The Starbucks Strategy”) in that 15-20 years ago before relatively good 70% dark chocolate graced the shelves of every grocery and drug store in the land, Godiva was relatively speaking, fine chocolate.  However as the years passed and demand for good chocolate increased, Godiva opted to pursue a volume strategy, while getting by on status quo quality.  

This brings me to my last point – making the customer believe something that you can’t or won’t deliver on leaves a lasting negative impression.  The worst kind of PR a company can have.  And while an entity as large as Godiva may be able to withstand a some disappointed customers, many small businesses whose reach is a great deal smaller and depend on repeat business, can’t. 

The moral of this tale?  Tell an honest story, deliver on your promises, and price appropriately.