CASE STUDY: ETHEL'S CHOCOLATE LOUNGES
BACK TO THE FUTURE? CHOCOLATE LOUNGES TASTE SWEET SUCCESS
The chocolate house dates back to seventeenth-century London, when members of society's elite would gather in luxurious surroundings to relax and sip hot chocolate. Later, Europeans expanded on that idea and developed solid chocolate treats that sold in upscale boutiques. Lacking the resources and economy of established continentals, bootstrapping American settlers pioneered the development of cheaper chocolate bars for the masses.
Centuries have passed, however, and the American palate has tired of the taste of mass-produced chocolate. The U.S. chocolate industry has experienced growth of less than 3 percent since the turn of the millennium, and the lack of industry innovation has left a bad taste in chocolate purveyors' mouths, too. Enter Ethel's Chocolate Lounges, named in honor of the matriarch of the Mars family, who founded the candy company with her husband Frank in 1911.
Now Ethel Mars's name adorns the signs at the company's latest attempt to breathe fresh life into chocolate. Aware that chocolate sales at upscale retail outlets, like Godiva and Starbucks grew by nearly 20 percent from 2002 to 2004, Mars opened Ethel's Chocolate Lounge in the Lincoln Park neighborhood of Chicago in April 2005. More Ethel's Lounges have opened since then, and the chic chocolate houses are Mars's bet that well-heeled and sweet-toothed consumers will take to premium chocolate the same way that well-to-do coffee lovers flock to Starbucks for high-priced java. Ethel's Lounges are designed to coddle patrons in the lap of luxury, but Mars president John Haugh maintains that what makes Ethel's special is that it offers "approachable gourmet chocolate." In other words, you don't have to be a millionaire to enjoy the sweet taste of the good life.
Prices are not for everyone's wallet, however. Truffles and Tea for Two, which features all 11 of Ethel's truffles served on a silver platter, sells for $15. Chocolates and Cocoa for Two includes two cocoas and 10 pieces of chocolate for $18, and a box of 48 chocolates is $42. Five "Collections" offer over 50 individual chocolates that sell for between $.90 and $1.50.
Supporting Haugh's claim of approachability, though, the menus at Ethel's feature icons and descriptions of the chocolates' contents so that customers won't experience an unwanted surprise. A multitude of hot and cold beverages give visitors more reasons to extend their stays.
But it's not just the chocolate that makes Ethel's such a desirable destination. Advertising describes Ethel's as "a place for chocolate and chitchat." Generously stuffed pink couches with brown accents combine upscale modern and traditional looks to give the stores a hip and classy feel. For those who don't immediately get it, a sign behind the counter reads, "Chocolate is the new black." The stores' appeal is their relaxing ambience and neighborhood vibe-like a modern American coffeehouse, these shops encourage socializing and extended lounging. The effect is carefully planned. Mars's research revealed that even calorie conscious consumers will splurge for the good stuff as long as a broader social experience comes with it.
Parallels to the Starbucks-led American coffee revival are obvious and inescapable. Confectionary industry insiders note that chocolate cafés are taking hold, and research confirms their belief. Datamonitor, a research firm specializing in trend identification, described chocolate as "the new coffee" on its list of the top ten trends to watch in 2006. The popularity of the Chocolate Bar in New York, billed as a "candy store for grown-ups," and South Bend Chocolate's ten chocolate cafés shows that the trend is for real. Even some Hershey's stores now offer seating for patrons.
Joan Steuer, president of Chocolate Marketing, claims that, for women, enjoying chocolate in a luxurious lounge is like taking a candle-lit bubble bath. She notes, too, that much of the appeal is that the experience is testimony to the person's upward mobility. It's a perfect way to cater to the American desire to have the best that money can buy.*
Source: Amy Chozick and Timothy Martin, "A Place for Cocoa Nuts?", Wall Street Journal,
7/15/2005, B1, B3; "Ethel's Launches First-Ever Approachable, Everyday Gourmet Chocolate
and Chocolate Lounges, Opens First Two Stores in Chicago, Expected to Expand to Six by End
of Summer", PR Newswire, 6/6/2005; Karen Hawkins, ‘Chocolate Lounges' Present Themselves
as "Sweet Alternative to Coffee Shops, Bars", AP, 2/13/2006; Melinda Murphy, "Trend Report:
Chocolate Is Hot", CBS News Online.
Questions
1. What type of consumer buying decision best describes the choice to indulge at Ethel's?
2. List the factors that might influence a consumer to spend money and time at Ethel's. Which factor do you think will motivate a consumer the most? Why?
3. Review the core American values below. Which value does the Ethel's experience appeal to most? Explain.
Core American Values
Success Americans admire hard work, entrepreneurship, achievement, and success. Those achieving success in American society are rewarded with money, status, and prestige. For example, Bill Gates, once a nerdy computer buff, built Microsoft Corporation into an internationally known giant. Gates is now one of the richest people in the world.
Materialism Americans value owning tangible goods. American society encourages consumption, ownership, and possession. Americans judge others based on their material possessions; for example, the type of car they own, where they live, and what type of clothes they wear.
Freedom The American culture was founded on the principle of religious and political freedom. The U.S. Constitution and the Bill of Rights assure American citizens the right to life, liberty, and the pursuit of happiness. These freedoms are fundamental to the legal system and the moral fiber of American culture. The Internet, for example, is built on the principle of the right to free speech. Lawmakers who have attempted to limit the material available on the Internet have met with tough opposition from proponents of free speech. Spam has become such a major problem in recent years, however, that individuals are becoming more receptive to laws restricting spam even if they limit spammers' free speech.
Progress Technological advances, as well as advances in medicine, science, health, and the quality of products and services, are important to Americans. Each year, for example, more than 20,000 new or improved consumer products are introduced on America's supermarket shelves.*
Youth Americans are obsessed with youth and spend a good deal of time on products and procedures that make them feel and look younger. Americans spend millions each year on health and beauty aids, health clubs, and healthy foods. Media and advertising encourage the quest for youth by using young, attractive, slim models, such as those in ads from fashion designer Calvin Klein.
Capitalism Americans believe in a free enterprise system characterized by competition and the chance for monetary success. Capitalism creates choices, quality, and value for Americans. Laws prohibit monopolistic control of a market and regulate free trade. Americans encourage small business success, such as that found by Apple Computer, Wal-Mart, and McDonald's, all of which started as small enterprises with a better idea that toppled the competition.
*Data obtained from the Food Marketing Institute Web site at https://www.fmi.org, 2004.
Source: Consumer Behavior by William D. Wells and David Prensky. Copyright © 1996 John Wiley & Sons, Inc. Reprinted by permission of John Wiley & Sons.