Case Study: the introduction of

Simon Heptonstall

Presented to Prof. Dr. Tobias Langner in accordance with the requirements of the HEC Executive Brand Management course at the University of Geneva Business School

1. Introduction

In September 2012 the German arm of Switzerland’s Lindt & Sprüngli, one of the world’s

leading manufacturers of premium chocolates, announced the launch of a new series of

chocolates, called ‘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. It also raises important questions about how the new prod-

uct line fits into the company’s overall business strategy and its possible feedback effects on

Lindt’s corporate brand.

2. Lindt: the early years

Chocoladefabriken Lindt & Sprüngli AG ‘s roots stretch back to the 19th century. This was the

pioneering era of Swiss chocolate manufacturing and of personalities like François Cailler

(who set up the country’s first chocolate factory near Vevey in 1819) and Philipe Suchard who

would both go on to establish famous chocolate companies.

Founded in Zurich in 1845 by David Sprüngli, Sprüngli & Son were the first company in

the German-speaking part of Switzerland to produce chocolate. An important turning-point

came with the acquisition of a small but prestigious Bernese chocolate manufacturer,

Rodolphe Lindt & Fils. Lindt had developed a revolutionary process of combining cocoa

beans, cocoa butter and sugar, grinding them together in a machine originally intended for

milling spices. The Lindt technique produced chocolate with a particularly smooth texture

and removed any bitter taste in the finished product. Purchasing the company, for what was

at the time an astronomical sum (1.5 million gold francs), in 1899 Sprüngli & Son not only

acquired Lindt’s manufacturing secrets but also the rights to the Lindt brand name which

had already become famous throughout Europe1.

3. Lindt: international expansion

Lindt’s first period of international expansion in the early 20th century was cut short by reces-

sion in the 1920s and increasing government protectionism throughout Europe in the

run-up to World War II. Post-war, the company concentrated mainly on the Swiss market:

until 1980 roughly 80% of its chocolates were consumed domestically. It was only in the 1980s

that Lindt & Sprüngli developed into the international group that it is today, becoming a

public company listed on the Swiss stock exchange in 1986. Lindt Germany in Aachen

became a wholly-owned subsidiary in the same year. In 1989 Lindt USA, located in Stratham,

New Hampshire started production. By 1992 Lindt Germany had already overtaken its parent

company in sales and employed more people.

The current chairman and CEO Ernst Tanner, formerly of Johnson & Johnson, joined

Lindt in 1994 and initiated another round of international expansion, this time primarily

through acquisitions such as US chocolatier Ghirardelli and Austria’s Hofbauer.

4. Lindt: the current situation

Tanner’s nearly-20 years at the head of Lindt have been a time of stability and prosperity: sales

have tripled and profits have increased sevenfold. Tanner is also the company’s largest share-

holder.

Though the global crash of 2008 caused the first fall in Lindt’s share price in the entire

Tanner period, the premium chocolate market has shown itself to be largely recession-proof.

This is because premium chocolate is a ‘lipstick luxury’2 – a relatively inexpensive indulgence

that people continue to buy during an economic downturn when they have had to forgo cost-

lier luxury purchases.

Even so, as the market for premium chocolate is decelerating in Europe and the continuing

high value of the Swiss franc is making exports less competitive. Lindt & Sprüngli clearly need

a strategy to revive sales – either bolstering demand for their existing products or by develop-

ing new products to appeal to new markets.

The US economy shows signs of revival and the US, as the world’s largest confectionery

market, offers significant opportunities for growth. According to Lindt USA, in 2011 Ameri-

cans consumed roughly half the amount of chocolate per capita as the Swiss (11.6 lb compared

to 23.7) but, significantly, a far smaller proportion of that consumption was in the premium

category (0.3lb compared to 4.3lb in Switzerland)3. Industry analysts Vreeland & Associates

predict continued expansion of the US chocolate market from US$ 17.3 billion in 2009 to

$19 billion in 2014 with the premium sector set to grow from 12% to 17% of the total during

the same period4.

5. Lindt: brand positioning

Although Ernst Tanner is considered to be the person most responsible for positioning Lindt

as a premium chocolate brand, this process in fact started earlier 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 that Swiss

rivals Suchard or Cailler.

One can easily extrapolate Lindt’s current brand attributes from their corporate slogan/

logo strapline. In “Master Swiss Chocolatier since 1845” we can read:

1. Mastery of the techniques of chocolate production, expertise hence high quality.

2. Origin of the brand in Switzerland, as prestigious for chocolates as origin in Belgium.

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

To ‘quality’, ‘prestige’ and ‘tradition’ we can perhaps add enjoyment of consuming such a

high-quality and exclusive product. When giving Lindt chocolates, these attributes add value

to the gift and reflect positively on the giver (Kapferer (2008) underlines the importance of

a brand’s reflective component – the effect it has on how a consumer is viewed by others).

The ‘Maître Chocolatiers’ key visual, introduced in 2004 and seen on all of Lindt’s print,

poster, TV and web communication, encapsulates Lindt’s positioning very effectively. In a

spotless kitchen, bathed in warm orange light, one or more ‘chocolatiers’, all in their 50s and

dressed in white chef’s uniforms are seen delicately whisking melted chocolate in a brass bowl

or carefully placing a roasted almond on top of a Lindt praliné. Though Lindt’s chocolate

production is of course now fully-automated, the Maître Chocolatiers communicate the at-

tention to detail and expertise that justifies its higher price and premium positioning.

The Maître Chocolatiers campaign, developed by Lindt marketing chief Dr. Uwe Sommer

and the FCB Wilkens advertising agency (now Draft FCB), has been extremely successful. Ac-

cording to a 2005 report by market research company GFK, its introduction was found to have

immediately increased awareness of Lindt as a manufacturer and reinforced the image of the

brand, all this while spending significantly less than its competitors. Images of the Master

chocolatiers at work also serve to differentiate Lindt from its competitors who have tended to

use lifestyle concepts in their communication, rather than images of chocolate production.

Mahmud (2010) has suggested that the 2010 introduction of tennis star Roger Federer as

the first brand ambassador in the company’s

history has been a subtle way of modifying

Lindt’s positioning in response to the 2008 re-

cession. Using the star by himself or next to a

Maître Chocolatier chimes with the company’s

Swissness and exclusivity (Federer also en-

dorses Rolex watches) but his reputation for

being down-to-earth allows Lindt to speak to

customers in a slightly more casual way. Lindt posters: c. 1910, 1949, 1968

6. Hello: product description

In the Hello range there are various boxes of pralinés, 100g tablets and 39g ‘chocolate sticks’.

The flavours are: Caramel Brownie, Cookies & Cream, Strawberry Cheesecake and Nougat

Crunch (colour-coded orange, yellow, red and blue, respectively). The packaging, covered in

English-language slogans like “I’ll make your tummy yummy” and “I just wanna say thank

you”, differs significantly from Lindt’s usual, elegant design. The background for the group

pack-shots appears to be a New York skyline, complete with a stylised version of the Chrysler

Building. There is no sign of a Maître Chocolatier anywhere and we are clearly a long way

from Switzerland!

To promote ‘Hello’, Lindt chose a new agency, Rapp Germany, rather than Draft FCB

Hamburg. Rapp describe the campaign in the following terms:

“The strategy consists of presenting the product as a desirable ‘lifestyle accessory’: just

like the TV ads that resemble music videos try to arouse the same feeling as savouring

chocolate in the viewer. [...] corresponding print and online communication, along with

a social media campaign can turn consumers into fans and a website provides guidance

and makes them want more.”5

Video is at the centre of the Hello campaign, with a spot for three of the four Hello flavours.

Rather than trying to attach human personality traits (Aaker, J. 1997) to Lindt Hello in gen-

eral, each 26-second spot presents a different stylishly dressed 20-something character as the

embodiment of a particular flavour in the Hello range. The male character personifying Hello

Nougat Crunch, for instance, is seen first jumping a motorcycle over shipping containers,

then smashing up an electric guitar, Pete Townsend-style, and finally Karate-chopping through

a concrete block: presumably all ‘crunchy’ activities. Strawberry Cheesecake is a blonde girl

who plays tennis and wears lots of pink clothes. Cookies & Cream is represented by a short-

haired brunette in a plaid shirt. This type of youth lifestyle imagery has often been used by

other confectionery companies in the marketing of chocolate bars, chewing gum or soda.

Using short video clips are an effective strategy for delivering branded content. TV and

web video and mobile telephony have already converged and online video consumption is

predicted to sky-rocket this year due to the increasing popularity of tablets and the imminent

arrival of 4G wireless protocol.

These videos, shot in Milan by French/Lebanese director duo Leila & Damien de Blinkk,

can be watched on lindt-hello.com The website also provides product information, online

ordering and competitions.

The Rapp campaign also gives Lindt Hello a presence on a number of Web 2.0 commu-

nity-building/social websites: Youtube, Pinterest, Instagram and Facebook (with 6500 ‘likes’

at the time of writing). This is in line with current thinking on the need for brands to encour-

age engagement and participation in spite of their subsequent loss of a certain degree of

control over their communication. Moon et al (2008) state that people are becoming less and

less inclined to trust governments, religions and figures of authority but will listen to the

opinions of other consumers, preferably friends or members of their own social networks. It

is consequently more profitable to use the abovementioned websites to encourage the devel-

opment of a thriving Lindt Hello online community than to attempt ‘top down’ communica-

tion that may be viewed with suspicion. Thought the technology is new, the objectives are

those of what, since the early 1980s (Agaraya & Singh 2011), has been termed ‘relationship

marketing’ or ‘customer relationship management’: to interact with customers building up

loyalty and trust as awareness of a product and a favourable image alone are not sufficient to

guarantee customer purchase decisions in the long term.

Another pillar of the campaign was a high-profile event, the ‘Lindt Hello VIP Nite’ that

took place at Berlin’s Goya nightclub (described by Time Out as a ‘glamorous and glitzy’

venue) on the 4th of September 2012. Here a number of German celebrities (mostly from

reality-TV shows such as ‘Germany’s Next Top Model’) danced the night away with Boris

Becker’s DJ son Noah at the turntables.

In short, neither the new products nor the manner in which they are being promoted have

much in common with Lindt’s established traditions.

7. Hello positioning

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

“Our client Lindt & Sprüngli, the premium chocolate manufacturer, 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 [eine

Trendmarke in the original text].”6

Lindt’s usual target demographic has been described by one researcher as being “women

aged 30 and over with higher incomes and education levels”7 and by another as “35 to 54

years old females with a household income of over $50,000” (Brandweek 2001). Hello is

clearly designed to appeal to a younger customer. Judging by the ages of the people in the

Hello campaign videos (two female, one male), the ‘new audience’ that Lindt is targeting is

the ‘young adult’ segment, aged between 22 and 30. The reference to consumers ‘who value

quality’ and the fact that Hello is priced firmly in US trade journal Candy Industry’s ‘Upscale

a Maître Chocolatier Mr. Hello Nougat Crunch

Premium’8 category suggests that these young adults are also professionals with a reasonable

amount of disposable income. Rapp Germany explicitly aims to endow Lindt Hello with a

cool and trendy personality in order to appeal to this new market segment.

One way of doing this is by developing associations between the product and the fashion

industry. An important precedent in creating a Trendmarke, which must have influenced the

agency’s thinking, is Diet Coke’s success in establishing itself as the fashion industry’s fizzy

drink of choice. Starting in February 2011 this has involved using personalities from the fash-

ion world as ‘brand ambassadors’ (first Karl Lagerfeld, then

Jean-Paul Gaultier) or to design limited-edition Diet Coke

bottles, as well as partnerships with fashion magazines, the

sponsorship of fashion parties and events. Using events as

part of a marketing strategy to connect with young ‘fashion-

istas’ has also been done by Diet Coke, who have organised

parties very similar to the ‘Lindt Hello VIP Nite’ during Lon-

don and New York fashion weeks. Slim, glamorous catwalk

models drinking a beverage aimed at women interested in

losing weight is a very compelling image. Associating choco-

late (which is not known for helping weight loss) with the

fashion world is a rather less obvious ‘fit’!

8. Hello: a line extension or a sub-brand?

When a firm is seeking to expand or attract new customers, introducing new products has

always been a popular strategy. It can either add a new model to the range that it already pro-

duces (a product line extension) or can put its brand equity to work and move into an

entirely new product category (a brand extension). For chocolate manufacturers such cate-

gory extensions have included Mars ice-creams or milk drinks and Lindt cake decorating

products.

A tablet of Lindt Hello is essentially the same product as a bar of their existing Lindt Excel-

lence line. Both are comprised of a flavoured, sweet filling that is encased in chocolate. Both

are designed to be broken into squares before being eaten. Both are wrapped in aluminum

foil and then paper. This is an extension to Lindt’s product line rather than a move into a

new product category.

There are many advantages to extending a product line as a means of reaching a new cus-

tomer segment. As well as reduced costs and catering to a wider range of tastes, an extended

product line discourages new entrants to a particular market and, if stocked, increases a

brands share of shelf space, attracting more attention from prospective consumers.

Quelch & Kenny (1994) also point out the particular appeal of line extensions to man-

agers: they are a short-term method of delivering growth to impatient shareholders and

avoiding the career risk of being involved in the unsuccessful development of a new brand.

For chocolate manufacturers, an extended product line has been found to create a

favourable image in the minds of consumers. Investigating the effects of product variety on

the perception of chocolate, Berger, Dragnska, and Simonson (2007) conducted a number

Lindt Hello ‘VIP Nite’ Diet Coke Gaultier Launch

of experiments where subjects were asked to compare two fictitious brands, one said to pro-

duce 30 different flavours, the other only 10. They found that when respondents were asked

to choose between the two they were more likely to pick a chocolate made by the supposedly

high-variety brand. They also perceived it as being of higher quality and even claimed to pre-

fer the actual taste of the product.

There are, of course, potential drawbacks to product line extensions. Multi-item lines cost

more to produce and the introduction of a new model or flavour can cannibalise the sales of

a firm’s existing products. Extensions also run the risk of diluting the image of a brand in cus-

tomers’ minds or contaminating it by creating new associations. Janiszewski and Van Osselaer

(2000) warn that vertical line extensions to a lower-quality are particularly dangerous because

they threaten to taint a brand’s otherwise higher-quality image.

Because of this, for a line extension to be successful there needs to be a degree of consis-

tency. Wicke10, responding to Quelch and Kenny (1994), warns managers that they must:

“[...] carefully evaluate not only how the brand affects the line extension but also how the

line extension affects the brand. A brand’s equity consists of the key elements that drive

demand for brand products and services. This includes some aspects of how customers per-

ceive and experience the brand – its image – but not necessarily all aspects. It is critical to

identify the key equity elements and to ensure that the line-extension strategy is appropri-

ately designed to leverage, protect, and reinforce the brand equity. Consistency with brand

image may not he enough; consistency with the brand equity is required. If the line-exten-

sion image jars with any of the brand equity elements, it will erode the entire line.”

If there is a risk that a new product will create dissonance with existing brand elements,

firms can create a sub-brand which is endorsed by the parent brand. This is essentially the

halfway point between using an existing band name and creating an entirely new brand with

ownership ‘behind the scenes’ (the method Proctor & Gamble and

Unilever have used until recently). Marriott opted for this strategy when

launching a series of lower-cost hotels in the US they named them ‘Fairfield

Inn by Marriott’ and ‘Courtyard by Marriott’11. This puts Marriott’s brand

capital to work attracting customers but, crucially, provides a mechanism

for differentiation. Being seen as separate but also linked to Marriott hotels

is intended to protect the parent brand against negative spillover effects.

With the total break with Lindt key imagery and tone of voice in the Hello campaign, the

company is encouraging customers to see this new range as being different to their existing

offerings. They stop short of making Hello a sub-brand, however, as the logo makes it clear

that we are supposed to read ‘Lindt Hello’ and not ‘Hello by Lindt’ or simply ‘Hello’12.

The Hello packaging layout is another case in point. Exactly like all the company’s other

chocolate products, the gold foil-stamped and embossed Lindt logo is centred at the top of

the wrapper or box. Under the logo, separated by a horizontal line, the product name (‘Petits

desserts’, ‘Lindor’, ‘Création’ and so on) is always written in capitals in the Optima typeface.

Here Hello breaks with Lindt design conventions and uses two separate handwriting type-

faces.

This use of handwriting (‘informal script’) typefaces for “Hello my name is” and the

flavour is intended to make the packaging look ‘informal’. According to Dr. Adalbert Lech-

ner (CEO of Lindt & Sprüngli Germany):

“The world has become more informal and world-famous firms are led by people in T-

shirts and sweaters with rolled up collars. The way we speak is changing, we chat, we

tweet, we send short text messages: today even relationships can be ended with an SMS.

Our “Lindt Hello” is thus an informal product.”13

What it actually does is to make Lindt Hello look less of a premium product and more like a

downward vertical line extension (even though it is in a similar price bracket to the com-

pany’s other offerings). Lindt Hello’s refusal to commit to proximity to or distance from the

company’s existing range results in a hybrid: a horizontal line extension that looks like a low-

cost sub-brand. This risks creating the negative feedback effects mentioned earlier. Seeing

Hello products on a shelf next to Lindor or Excellence could very easily make Lindt itself

appear to be moving downmarket.

9. The removal of ‘Swissness’

Perhaps the most striking thing about Lindt Hello is the removal of any reference to Switzer-

land.

Swiss goods and services enjoy an excellent reputation worldwide, maybe more than those

of any other country. They are seen as representing quality, exclusiveness and reliability. This

reputation enables goods of Swiss origin to be to be positioned in higher price brackets.

For Keller (2008) Swiss origin is a ‘secondary association’. The country of Switzerland has

its own associations that are borrowed and leveraged by Lindt whenever it describes itself as

a ‘Swiss Master Chocolatier’.

Interestingly, the 2006 University of St.Gallen ‘Swissness Worldwide’ survey stated that this

process actually works in reverse with it being the quality of Swiss products that provide the

country itself with a favourable reputation. Because of this, they declare that Swiss companies

and Switzerland as a country are ‘in a relation of mutual dependence’.

“Brand Switzerland is less influenced by concerted communication or specifically

targeted brand management; rather, it is Swiss companies conduct that provides the

main impact. Swiss goods, products and brands have had the greatest influence on the

positive image of Switzerland. The management of Switzerland as a brand is thus taken

on daily by all the actors who present themselves as Swiss.”

For chocolate, Swiss origin has been found to go a great deal further than simply providing

a favourable reputation. In a recent study, Wilcox, Roggeveen, and Grewal (2011) conducted

a series of blind tests during which people were given identical pieces of unbranded (Ameri-

can) chocolate to taste but told the first chocolate was from China then from Switzerland. A

majority of respondents claimed to actually prefer the taste of the same piece of chocolate

when told it was Swiss.

In his statement at the launch of Hello, Ernst Tanner does voice his initial concerns about

the removal of Swissness from Lindt Hello. He also introduces a distinction between German

and Swiss Lindt products.

“One can accuse us Swiss of being stubborn and our stubbornness is perhaps justified as

this may be the reason why we are so very successful in certain areas. I must admit that

when I first saw that brand name of “Lindt Hello – Nice to Sweet You” I said to myself,

this time the German team has gone crazy! After all we are a conservative firm and we are

proud of our Swiss traditions.”14

Tanner then backtracks and takes ownership of Hello for Switzerland, suggesting that the

meaning of ‘Swissness’ itself has changed and needs to be revaluated. Switzerland is a land of

innovation and Lindt Hello is a product that epitomises this

modern, forward-thinking country, just like the Swatch.

“... Yet on the other hand I can think of numerous Swiss pioneers,

of those courageous and inventive people who, thanks to their sin-

gle-mindedness with innovative and groundbreaking ideas

achieved success and revolutionized entire industries. The Swiss

who turned the watch trade on its head with colourful plastic

watches or transformed the European breakfast tradition with

their “Müsli”. You do not necessarily have to feel like William Tell

to be convinced that “Lindt Hello – Nice to Sweet You” hits the

right spot and will create enthusiasm among Swiss consumers.”

The head of Lindt Germany, Dr. Adalbert Lechner appears to contradict Tanner’s statement.

Rather than Lindt Hello being the product of a ‘new’ Switzerland, Lechner sees it as a global

product for a smaller, more interconnected world.

“Why is Lindt heading in a new direction? The world is changing at 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 as taxi fares these days

are more costly that plane tickets to London. English has become the global lingua franca

and expressions like ‘Germany’s Next Top Model’, ‘Fashion Week’, ‘Catwalk’ now sound

perfectly normal to us in German. This is why ‘Hello’ conveys a feeling of urban living.”15

In his influential 1983 essay ‘The Globalization of Markets’, Theodore Levitt had excitedly

predicted that in the future companies would offer standardised products for sale globally.

“Corporations geared to this new reality benefit from enormous economies of scale in

production, distribution, marketing, and management. By translating these benefits into

reduced world prices, they can decimate competitors that still live in the disabling grip of

old assumptions about how the world works.”

Lindt POS display, Zürich airport

There are in fact important barriers to creating a ‘global’ chocolate of the kind that Levitt

might have envisaged: local tastes. Firstly we are said to develop preference for a certain type

of chocolate in childhood, be it Lindt, Cadbury’s or the much sweeter Hershey’s which

becomes strongly-ingrained. According to a Cadbury Schweppes public relations manager

quoted in Margolin (2001):

“By and large well-established markets have an established chocolate taste – the UK andcommonwealth countries are defined by Cadbury chocolate, the US by the Hershey Barand the Continent by high-cocoa content products such as Lindt and Suchard. With thetaste of chocolate defined in early childhood, it is thus pretty difficult to break.”

Then there are localised tastes for flavours and fillings, such as the prevalence of peanut and

peanut butter chocolates in the US. It would seem to be on this distinct US market that Hello

is targeted.

10. A product for the US market?

In the Lindt press release accompanying the Goya Berlin party, Ernst Tanner had already

stated that, after Germany and Austria, Hello is set to be launched worldwide:

“Hello, the new generation of chocolates will first be available in Germany then launched

worldwide in 2013”. 16

With Lindt Hello being produced in the quintessentially American flavours of brownie,

cheesecake and cookies & cream (the cookies in question being Nabisco’s ‘Oreos’, the US’s

best-selling biscuit), the presence of US imagery on the website and the fact that the product

already ‘speaks’ English (“Nice to Sweet You”...etc) one might speculate that it has in fact

been designed for the US market. The presence of Hello products in Lindt US’s ‘Spread

Chocolate Cheer: Holiday Gifts 2012’ catalogue of products available to order this would cer-

tainly support this theory.

There has been a clear pattern of increased investment by Lindt into its US subsidiary –

the company spent $30 million to expand its Stratham, New Hampshire factory in 2006,

more than doubling the plant’s size. The construction of a new in-house bean roasting facility

was also announced August 2010.

Extensions are an important tool for expansion into coun-

tries offering higher growth opportunities. In 2011 Mars

introduced a peanut-butter version of its Snickers bar onto the

US market to compete with the hugely popular Hershey’s-

owned Reece’s peanut-butter cups and a limited-edition maple

syrup Snickers in Canada. Nestlé have pursued a very successful

product-line extension strategy with its KitKat bar in Japan.

Launching no fewer than 19 varieties of KitKat (including

green tea, soy sauce and sweet potato flavours) in 2009 has

made it the number one confectionery brand in the country.

Soy sauce-flavour KitKat

Conclusions

While Lindt Germany deserves credit for its willingness to take risks and develop innovative

new products rather than just sitting back and hoping the good times will continue, there are

serious problems with Hello. These stem from an unwillingness to decide how similar or dif-

ferent Hello is to the rest of Lindt’s products.

If it is to be seen as part of the Lindt range to the same degree as a Lindor truffle or a

golden Easter bunny, there needs to be consistency and what Kapferer (2008) terms a confir-

mation of the presence of brand core facets (in this case: prestige, quality, Swissness and

tradition) in each product. Apart from a general consensus among reviewers that Lindt Hello

is high-quality chocolate, these core facets are glaringly absent.

If, on the other hand, the company wishes to indicate difference between this new product

and the rest of the Lindt range, a sub-branding strategy would have been preferable in order

to avoid negative feedback effects. While developing ‘Hello’ as a new brand without any clues

as to ownership would be expensive and risky, using an endorsed identity: ‘Hello by Lindt’

rather than ‘Lindt Hello’ would have provided customers with a mental framework for differ-

entiation and protected the parent brand from contamination.

At present, Lindt Hello falls somewhere between the two and there seems to be a very real

danger that by introducing a line extension that looks ‘cheaper’ (even if it is only intended

to look ‘younger’ and ‘more informal’) than its other products, customers will infer that it is

Lindt itself that has somehow become less of a premium chocolate manufacturer. The com-

pany therefore risks alienating its core customer base.

Usual Lindt productnaming convention

Lindt Hello, logo as seen onpackaging

Lindt Hello, official logoOption 1: Lindt Hello asa coherent line extension

Option 2: Lindt Hello asan endorsed sub-brand

Notes

1. Almost 200 years later another chocolate company would purchase a rival for what appeared to be an inflated price. During the hostile takeover of Rowntree by Nestlé in May 1988. The Swiss company paid 6 times Rowntree’s share value. not just for manufacturing plants and distribution channels but to acquire ‘Smarties’, ‘Quality Street’ or ‘After Eight’ and the equity that these brands had built up over the course of a century of existence.

2. The lipstick effect also explains the resilience of the restaurant and entertainment industries during recessions.

3. Figures quoted by Lindt USA CEO Thomas Linemayer in: Candy Industry ‘Positively Premium’ May 1, 2011

4. Figures quoted by Steven Rosenbush, Vreeland Associates Chocolate Market TrendsMonday, June 4, 2012 (from: http://www.vreelandassociates.com/demand-for-premium-chocolate-is-booming-despite-the-recession/)

5. From: http://www.rappgermany.com/de/arbeit/Lindt-Hello.html

6. ibid.

7. „Kernzielgruppe sind Frauen ab 30 Jahren mit gehobenem Einkommen und Bildungsniveau, die Wert auf einen gepflegten Lebensstil legen.“ (from: http://www.gwa.de/images/effie_db/2005/250965_128_Lindt.pdf)

8. US trade journal Candy Industry divides the premium chocolate category into three segments: ‘everyday gourmet’ at $8.00-$15.99/lb, ‘upscale premium’ at $16.00-$23.99/lb and ‘super premium’ above $24.00. At $5 for 3.5oz, a bar of Lindt Hello works out at $22.86/lb.

9. From: http://www.marketingweek.co.uk/news/diet-coke-to-extend-fashionista-strategy/4000613.article

10. Same reference as Quelch J. & Kenny (1994) page 59

11. The example is from Aaker (1997) pages 138-139

12. Though the three videos do in fact start with the word “Hello” and close with a “by Lindt” endorsement.

13. From http://suite101.de/article/ausserst-gelungene-premiere-von-lindt-hello--nice-to-sweet-you-a137941#ixzz2JZgPZhad

14. ibid.

15. ibid.

16. From: http://www.nachrichten-aktuell.com/lindt-hello-vip-nite-suser-abend-mit-viel-prominenz-in-berlin.html

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