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Case Study: Selecting Partner And Product Development
After completing his graduation in commerce from a local college in Addis Ababa Mr. Hailu, the son of a wealthy shop owner was looking for a business venture. His father advised him to visit some foreign countries before making his final choice.
While on a trip to the US Mr. Hailu has a chance meeting with Mr. Yared. As this meeting develops into a close friendship, Mr. Hailu discovers that Mr. Yared is the owner of ‘Luv’, a very popular brand of chocolates there in the US. Surprisingly Mr. Yared is also interested in finding partners for setting up a venture in Addis Abab being greatly attracted by the huge market for chocolates.
He promises all expertise to Mr. Hailu who immediately returns to Addis Ababa. Bubbling with enthusiasm Mr. Hailu tells his father about his new venture and about his friendship with Mr. Yared. Seeing his enthusiasm Mr. Hailu’s father gives him a go-ahead signal to promise all financial support.
Soon Mr. Hailu and Mr. Yared jointly set up a plant for manufacturing chocolates in Addis Ababa
industrial area. Within a few months i.e. in early winter they launched a range of milk chocolates under the brand name “With Love” all over the country. Initially, they introduced two flavors of Rum and Pepper as Mr. Yared felt these were the most popular ones in the US. The packaging was on the lines of ‘Luv’ and looked novel. The results of test marketing in Addis were positive. Competitively priced and with heavy advertising support directed towards children and teenagers the results in March and early April were satisfying.
Mr. Hailu and Mr. Yared went on a pleasure trip to Dubai to celebrate their success. However, things went wrong on the market front in May and the sales dropped drastically. A number of complaints were received regarding the softening of the chocolates on the shop shelves, as many shops did not have refrigerators. The sweltering winter was too much for the chocolates. Moreover, retailers also provided feedback that the flavors were not very much liked by children. The packaging was not strong enough to bear the rough transportation on Addis Ababa roads.
While Mr. Hailu was heartbroken and searching for the causes of failure Mr. Yared decided to withdraw from the project. Please write your argument based on marketing management principles and concepts, and from your experience.
- What mistakes do you think did Mr. Hailu commit?
- How should Mr. Hailu have proceeded before launching the product in Addis Ababa?
- How can Mr. Hailu salvage the venture?