Gender and Diversity – Special Target Groups and New Markets –

Green Marketing: RITTER SPORT BIO as an example of a

conventional company’s foray into the organic market

Case Study

Current Issues in Marketing

International Marketing Management (M.A.) Berlin School of Economics and Law

Isabel Hillenbrand Matriculation Number 281476

Kathleen Ix

Matriculation Number 282006

Berlin, 1 February 2010

II

Table of contents

List of figures III

1. Introduction 1

2. Theoretical basis of green marketing 2

3. Case study: RITTER SPORT BIO 4

3.1 Overview of the German organic chocolate market 4

3.2 The company: Alfred Ritter GmbH & Co. KG 5

3.3 Concept of the green product launch 5

3.4 Marketing mix 7

3.4.1 Product 7 3.4.2 Price 9 3.4.3 Distribution 9 3.4.4 Communication 10

3.5 Evaluation of the green product launch 12

3.5.1 Résumé of the company 12 3.5.2 Feedback of the consumers 13

4. Conclusion 15

Bibliography IV

Appendix XI

III

List of figures

Figure 1 Revenues German organic confectionary market 2006-2008 4

Figure 2 RITTER SPORT BIO range 6

Figure 3 The German state-controlled eco-label „Bio-Siegel“ 7

Figure 4 RITTER SPORT BIO packaging versus RITTER SPORT conventional packaging

9

Figure 5 RITTER SPORT BIO fair stand 10

Figure 6 RITTER SPORT and RITTER SPORT BIO advertisements 11

Figure 7 RITTER SPORT BIO website 12

Figure 8 trnd project blog RITTER SPORT BIO 13

1

1. Introduction

Today’s consumer markets are characterized by a growing diversity in four major

demographic fields: lifestyle diversity, ethnic diversity, income diversity and age

diversity. In consequence, the variety in consumers’ needs, wants, and resources

is increasing as well. Mass market and segment marketing are increasingly less

appropriate approaches for an effective and efficient dealing with the fragmented

markets. Instead, customer-centric marketing is on the advance to become the

dominant marketing approach in the 21st century, characterized by an effort to

understand and satisfy the needs, wants, and resources of the individual consumer.

The overall objective of customer-centric marketing is a maximization of the

output-input ratio and the enhancement of customer loyalty and of the share of

wallet (cp. Sheth/Sisodia/Sharma, 2000, pp. 55-59). The major challenge lies in an

appropriate segmentation of the diverse markets to avoid overmarketing in certain

segments or undermarketing and mismarketing in others respectively. Successful

companies therefore possess an in-depth understanding of their target group (cp.

Sheth/Sisodia/Sharma, 2000, p. 65).

The following paper deals with a major consumer trend that has arisen particularly

out of an increasing diversity in lifestyle – green consumerism. The growing

concern about the environment is displayed in a changed buying behaviour as

consumers increasingly prefer to buy environmentally friendly products (cp.

Finisterra do Paço/Barata Raposo/Leal Filho, 2008, p. 17). In 2008, the

purchasing power of the German ecologically conscious consumers was estimated

at least 200 billion euros per annum and is about to further gain momentum (cp.

Schulz, 2008, p. 27).

As this change in consumption habits is of far-reaching relevance, more and more

conventional companies are entering the green market.

The following case study looks at the German chocolate producer Alfred Ritter

GmbH & Co. KG who launched its first organic chocolate bars under the name

“RITTER SPORT BIO” in April 2008. This paper aims at presenting the success

story of an originally conventional manufacturer “going green” by looking at pre-

defined critical success factors for green marketing.

2

2. Theoretical basis of green marketing

Although the demographic profile of the green consumer can be commonly

depicted as “educated urban women with a mid- to high-income”, these

demographic particularities lack the explanatory power of psychographic

characteristics. In consequence, marketers should focus on psychographic

variables for deriving appropriate green marketing measures (cp.

Straughan/Roberts, 1999, pp. 561-563). Green consumerism is driven by two

types of motives – by self-centred motives such as health concerns as well as by

the concern for more far-reaching issues such as environmental matters or global

social inequity (cp. Finisterra do Paço/Barata Raposo/Leal Filho, 2008, p. 20).

The resulting demand for environment-friendly products has led to the emergence

of a new marketing philosophy, known as green marketing. Green marketing

generally involves the production of "green" products sold to "green" consumers.

It can be defined as “the holistic management process responsible for identifying,

anticipating, and satisfying the needs of customers and society, in a profitable and

sustainable way” (cp. Peattie/Charter, 1997, p. 392). Yet, green marketing efforts

are primarily managerial strategies to increase sales (cp. Kilbourne, 1998, p. 642).

The present chapter will present key factors for a sustainable success of green

marketing strategies and activities.

First, product benefits should satisfy both subjective and environmental needs as

consumers are likely to be attracted to products that can both save money, be safer

for children and demonstrate the sustainable actions for the environment. As green

products are commonly perceived as inferior in quality, ensuring an equal or

higher performance compared to conventional products will help to boost green

product sales (cp. Pickett-Baker/Ozaki, 2008, pp. 291-293).

As green consumers are willing to pay a premium for products targeted at their

specific needs, companies generally price their green offers higher than their

conventional ones. Moreover, the augmented price also serves as an indicator of

the additional (ecological) products benefits (cp. Mahenc, 2007, pp. 462-463).

However, taking into consideration that green consumers judge prices in a more

sensitive way than others, companies have to pay attention that the pricing of their

green offer is perceived as justified and fair (cp. Shrum/McCarty/Lowrey, 1995,

p. 80).

3

In case of a holistic dedication of a company to a “green conduct”, the

distribution process has to be oriented on green issues such as socially and

environment-friendly procurement, logistics and recycling activities as well (cp.

Sbihi/Eglese, 2007, pp. 112-113).

Communication activities for green products or services should convince the

individual that his or her pro-environmental actions will be effective in fighting

environmental problems and show how other people benefit from the purchase

decision (cp. Straughan/Roberts, 1999, p. 563). In order to overcome the gap

between pro-environmental values and an actual purchase, communication

strategies should be both clear and persuasive. In doing so, companies will

succeed in making their product easily identifiable as “green” as well as in

achieving an attitude formation and thus a behavioural response (cp. Pickett-

Baker/Ozaki, 2008, p. 287; Hartmann/Apaolaza-Ibáñez, 2009, p. 731). Since print

and online media can convey detailed information, these two channels mark the

obvious choice in order to meet the information-seeking behaviour of the green

consumer (cp. Shrum/McCarty/Lowrey, 1995, p. 81). In view of the sensitivity

and the scepticism of green consumers towards dishonest claims, the

communication message has to establish trust and credibility by successfully

conveying care and empathy for the environment, competence and expertise,

openness and honesty as well as dedication and commitment (cp. Langeland,

1999, p. 84; Shrum/McCarty/Lowrey, 1995, p. 71). In consequence, green

advertising should not be limited to a cognitive approach, but should also include

a greater emotional appeal (cp. Pickett-Baker/Ozaki, 2008, p. 292). Due to the

tendency of green consumers to be well-educated and information-seekers,

advertisements should deliver substantive informative environmental claims (cp.

Langeland, 1999, p. 83; Hartmann/Apaolaza-Ibáñez, 2009, pp. 731-732). The

additional displaying of pleasant nature scenery further influences the

effectiveness of green advertising in a positive way as the consumers’ exposure to

virtual nature leads to psychological benefits such as pleasure or stress reduction

(cp. Hartmann/Apaolaza-Ibáñez, 2009, pp. 731-732).

4

3. Case study: RITTER SPORT BIO

3.1 Overview of the German organic chocolate market

In recent years, consumers’ demand for organic and fair-trade chocolate has seen

an impressive growth as people are increasingly concerned about the safety of

their food as well as about other social, ethical and environmental issues (cp.

ICCO, 2008, p. 23).

Fig. 1 Revenues German organic confectionary market 2006-2008 (cp. AgroMilagro,

2009, p. 5, own illustration)

From January to September 2008, revenues of organic chocolate in Germany

increased by 37 percent, compared to the same period of time in the previous year

(cp. AgroMilagro, 2009, p. 5).

Despite this impressive growth rate, organic chocolate is still a niche segment as it

holds a share of only one percent of the total chocolate market (cp. Menhard,

2009, p. 17). Until recently, organic chocolate was mainly offered by smaller

manufacturers in minor quantities (cp. Koch, 2008). In April 2008, RITTER

SPORT was the first volume chocolate manufacturer to launch an organic product

range. Within one year, the company quickly became the market leader, holding a

market share of about 30 percent in 2009 (cp. company interview, see appendix).

A key challenge the organic chocolate industry is facing is the scarcity of organic

Organic sugar total

Organic chocolate

Organic pastry

Organic salty snacks

Revenues Organic ConfectionaryFood Retailing/2006 - 2008

Organic sugar totalOrganic chocolateOrganic pastryOrganic salty snacks

Organic sugar totalOrganic chocolateOrganic pastryOrganic salty snacks

Revenues German Organic ConfectionaryFood Retailing 2006- 2008

5

raw material, especially cacao, as the worldwide increasing demand far outpaces

the supply (cp. Sümegg, 2008b).

3.2 The company: Alfred Ritter GmbH & Co. KG

RITTER SPORT can look back on almost 100 years of history. The family-owned

company was founded in 1912 and both its headquarters and production facilities

are still located in Waldenbuch in the south of Germany. Today, RITTER SPORT

products are sold in about 90 countries and generated annual revenues of 296

million euros in 2008. The 800 employees are led by the company’s third

generation, Alfred T. Ritter and his sister Marli Hoppe-Ritter. The brand RITTER

SPORT enjoys a high level of consumer trust and sympathy. In its home market

Germany, it holds a distribution level of 100 percent in food retail stores and an

aided brand awareness of 99 percent (cp. RITTER SPORT, 2009a; 2009b).

RITTER SPORT’s portfolio of chocolate bars comprises in total 43 products. The

consumer can choose from 25 different flavours and six different sizes, such as

the traditional 100g bar or the recently launched 250g big bar (cp. RITTER

SPORT, 2009c). RITTER SPORT is positioned as a high quality volume

manufacturer pursuing a medium price strategy.

The company notably values and strives for a social approach towards its

employees, corporate citizenship as well as sustainable economic activity for

years. For example, RITTER SPORT has been involved in the protection of

tropical rain forests and the support of small cacao farmers in Nicaragua since

1990 (cp. RITTER SPORT, 2009d). Moreover, the company operates a highly-

efficient combined heating and power station for saving energy and reducing

carbon dioxide emission. In 1997, Alfred T. Ritter was granted with the award

“Öko-Manager des Jahres” for his long-term investments in ecological businesses,

such as Paradigma, a company committed to ecological and efficient heating

systems (cp. WWF, 2006; Paradigma, 2009).

3.3 Concept of the green product launch

In April 2008, RITTER SPORT launched its first organic product range in its

German-speaking key markets Germany, Austria and Switzerland (cp. company

interview, see appendix). The range originally comprised four flavours, Raisins

6

Cashew, Almond Slivers, Milk Chocolate 35% and Fine Extra Dark Chocolate

60% and was complemented by the launch of Macadamia in March 2009 (cp.

RITTER SPORT, 2009e; RITTER SPORT, 2009f).

Fig. 2 RITTER SPORT BIO range (cp. RITTER SPORT, 2009g)

RITTER SPORT conducted several qualitative and quantitative market research

studies prior to the launch in order to test the products’ perceived sensory

characteristics. However, RITTER SPORT did not test consumers’ values and

expectations regarding organic chocolate.

The defined key target group are women aged between 25 and 40, who can be

described as organic-affine consumers. RITTER SPORT explains this target

group focus with the fact that women tend to be more conscious about what they

eat and are thus more likely to purchase organic products (cp. company interview,

see appendix).

RITTER SPORT views the launch of its BIO range as a consequent continuation

of its quality strategy and thus not as simply following a trend (cp. Sümegg,

2008a). Moreover, the company regards organic chocolate and hence high-value

ingredients as an opportunity to overcome the price wars that are typical in the

confectionary industry (cp. Menhard, 2009, p. 17). Along with the quality

strategy, RITTER SPORT has pursued a long-term approach for the organic

product launch. Since 1990, the company has invested about 3 million euros in the

cultivation of organic cacao in Nicaragua. In 1990, when green consumption was

not a relevant consumer trend yet, the project was mainly intended to learn about

the cultivation of RITTER SPORT’s key ingredient cacao (cp. Koch, 2007). In

2000, the concrete plan to launch an organic chocolate came up for the first time.

The first smaller quantities of organic cacao could be exported to Germany in

7

2002. After that, the production as well as the quality of the organic cacao were

constantly increased, leading to a massive extension of the trade relations with

Nicaragua. In 2006, RITTER SPORT started to plan the product launch and thus

the overall marketing mix of its first organic range. RITTER SPORT explains this

rather long time to market with the (partly unexpected) challenge to find high-

quality cacao beans that meet the superior quality standards of RITTER SPORT

(cp. company interview, see appendix).

Today, the production of organic chocolate still accounts for only a share of about

1 percent of the total chocolate bar production (cp. Sümegg, 2008b). However,

RITTER SPORT aims for a continuous extension in the coming years (cp. Koch,

2008b). In view of the scarcity of organic cacao, Ritter Sport has already

established a competitive advantage by means of its long-running investments in

Nicaragua. These investments have enabled RITTER SPORT to close long-term

contracts with the local farmers which will eventually secure higher volumes of

the valuable raw material in the future (cp. Koch, 2007; RITTER SPORT, 2009h).

3.4 Marketing mix

3.4.1 Product

The RITTER SPORT BIO range contains 99 percent certified organic ingredients

(cp. RITTER SPORT, 2009h). The products are therefore certified with the state-

controlled “Bio-Siegel”, which is assigned to products that contain at least 95

percent certified organic ingredients (cp. Homborg, 2010).

Fig. 3 The German state-controlled eco label „Bio-Siegel“ (cp. Bundesanstalt für Landwirtschaft

und Ernährung, 2009)

This eco-label marks products and food that were produced and controlled

according to the EC regulations for organic farming. Amongst others, the “Bio-

Siegel” guarantees that organic farming does not employ genetic modification,

uses much less additives compared to conventional products, protects the earth,

8

the water and the air as well as the diversity of species (cp. Bundesanstalt für

Landwirtschaft und Ernährung, 2009).

The ingredients focus of the BIO range was put on nuts, which were found to be

highly popular among organic-affine consumers (cp. company interview, see

appendix).

Regarding the distinct product benefits, RITTER SPORT aims to intensify the

flavour of both the organic cacao and the additional organic ingredients by

carefully selecting the raw material and by processing it in an optimal manner, for

instance by a finer milling of the chocolate mixture. As a result, RITTER SPORT

promises to deliver a fine mouth-melting chocolate as well as a distinct

creaminess leading to a “unique unfolding richness in flavour” (cp. RITTER

SPORT, 2009i).

In the context of the market research studies conducted prior to the launch,

RITTER SPORT found out that women prefer smaller chocolate bar sizes. As a

result, the manufacturer launched the BIO chocolate bars with a volume of 65g,

marking an alternative to the regular RITTER SPORT 100g bars (cp. company

interview, see appendix).

Regarding the packaging, each flavour has its distinct two-shaded colour code. On

the left hand side of the front, the flavour-specific ingredients are highlighted,

whereas on the right hand side a profile of a chocolate piece is displayed.

Compared to the packaging of the non-organic chocolate bars, RITTER SPORT

thus clearly aims to highlight the products’ (organic) ingredients. Moreover, the

packaging shows the “Bio-Siegel” on both the front and the back side.

RITTER SPORT BIO 65g RITTER SPORT 100g

Fig. 4 RITTER SPORT BIO packaging versus RITTER SPORT conventional packaging

(cp. RITTER SPORT, 2009c)

9

In 1991, RITTER SPORT started to use fully recyclable Polypropylen material for

all of its packaging instead of the conventional composite material (cp. RITTER

SPORT, 2009j). This lightweight material allows the company to reduce material

wastage by about 1000t per annum (cp. RITTER SPORT, 2009k).

3.4.2 Price

With a recommended retail price of 0.99 euro for a 65g bar, RITTER SPORT’s

BIO range is positioned above the conventional RITTER SPORT 100g bars –

customers have to pay a premium of 14 Cent for 35 grams less of chocolate (cp.

company interview, see appendix).

However, RITTER SPORT did not decide on this higher price positioning out of

self-interest motives of profit increase, but due to the fact that organic ingredients

are scarce and have to meet RITTER SPORT’s general over-average quality

requirements and are therefore coupled with a considerably higher purchasing

price for the company compared to conventional raw materials. In this matter,

RITTER SPORT reckons on its customers’ willingness to pay more for the benefit

of organically grown ingredients resulting in a (subjectively) better taste and

health benefits as well as for the superior quality level RITTER SPORT is known

for – as Alfred T. Ritter uses to say, ‘Quality doesn’t come cheap!” (cp. company

interview, see appendix; RITTER SPORT, 2009l).

RITTER SPORT BIO’s relative price positioning of 1.52 euro for 100g is also

above competitive organic chocolate bars: Sarotti and Viviani, for example, offer

their 100g bar for 1.49 euro and Füllhorn even for 0.99 euro (cp. Viviani 2010;

Schokolade Blog, 2008a; Schokolade Blog, 2008b).

3.4.3 Distribution

RITTER SPORT’s BIO range holds a current distribution level of about 50

percent, which is still below the distribution level of the regular RITTER SPORT

range of 100 percent. Overall, RITTER SPORT strives for the same intensive

distribution as for its conventional range, aiming to achieve a listing in the few but

very big food retailers in Germany, such as Edeka or Rewe. However, the

company excludes a listing at discounter outlets. One challenge is the listing of its

10

organic chocolate in organic supermarkets as they tend to list small-sized organic

manufacturers only (cp. company interview, see appendix).

RITTER SPORT aspires to attain energy efficiency for its machinery as well as

for the factories’ heating and cooling. In addition to the company’s energy-saving

block heating station, it obtains the remaining energy from ecological friendly and

nuclear-free electricity generation (cp. Friedrich, 2003). Moreover, by

successfully participating in the “Eco Management and Audit Scheme”, RITTER

SPORT was the first confectionary manufacturer to organise environmental

protection on an operational level in the scope of a comprehensive management

system (cp. RITTER SPORT, 2009j). Concerning the procurement of its organic

ingredients, RITTER SPORT complies with the key criteria of fair trade, as the

company pays its farmers generally a premium of up to 50 percent over the world

market price (cp. company interview, see appendix). However, RITTER SPORT

has not applied for the official “Fairtrade” seal yet as the regulations imposed by

the organisation TransFair, who assigns the seal, are perceived as too strict. For

example, RITTER SPORT prefers to purchase milk powder from regional manu-

facturers and not from the world market at higher prices as required by TransFair

(cp. Koch, 2008a). Finally, the premium purchase price ensures enhanced living

conditions of the farmers as well as sustainable farming methods. Latter have a

positive impact on the protection of the rain forest, as they decrease the

motivation for tropical deforestation (cp. Koch, 2007; RITTER SPORT, 2009h).

3.4.4 Communication

RITTER SPORT BIO’s pre-launch

communications started with the company’s

appearance at the international confec-

tionary fair ISM in Cologne, Germany in

January 2008 when RITTER SPORT

presented its organic product range to the

public for the first time (cp. RITTER

SPORT, 2008).

Fig. 5 RITTER SPORT BIO fair stand (cp. Abseits, 2008)

11

Since 2007, RITTER SPORT has created a huge awareness with its „RITTER

SPORT Freunde“ campaign conveying the company’s revamped branding via

print and TV advertising and large-size billboards in German train stations as well

as a specific campaign website and corresponding social media activities (cp.

RITTER SPORT, 2008).

When launching RITTER SPORT BIO in April 2008, the company decided not to

accompany the launch by a further extensive campaign, but to limit the offline

communication on advertisements in selected sophisticated women magazines

such as Brigitte or FÜR SIE and POS material like posters or displays.

The concept and design of the BIO communication tools follow the “RITTER

SPORT Freunde” campaign in idea and layout and are only adapted in terms of

the specific claim, the green font colour and the display of the “Bio-Siegel”.

The decision not to invest in comprehensive communication efforts was based on

the inherently high product costs of the BIO range as well as on the fear of waste

coverage due to the specificity of the target segment compared to RITTER

SPORT’s traditional broad customer group (cp. company interview, see

appendix).

Fig. 6 RITTER SPORT and RITTER SPORT BIO advertisements (cp. RITTER SPORT, 2010)

Visiting the corporate website, customers find detailed information about the

RITTER SPORT products such as its nutritional values as well as facts and

pictures illustrating the quality chocolate’s manufacturing process (cp. RITTER

SPORT, 2009m). RITTER SPORT BIO’s sub-website provides even more

background details on the organic high-quality ingredients accompanied by

12

corresponding appealing natural imagery such as close-ups of nuts or cacao plants

(cp. RITTER SPORT, 2009n; company interview, see appendix). Moreover,

customers find a “Biolexikon” with in-depth information about the sources of the

raw materials, the “Bio-Siegel” and organic farming as well as RITTER SPORT’s

long-time cooperation in Nicaragua. As a special feature, RITTER SPORT has

prepared the information about the procurement and the processing of the

chocolate’s organic ingredients in the form of an entertaining demonstrative video

(cp. RITTER SPORT, 2009g). In addition, the BIO website offers a video

interview with RITTER SPORT’s CEO Alfred T. Ritter about the organic product

range as well as about the company’s dedication to sustainability (cp. RITTER

SPORT, 2009l). Finally, the advertising of RITTER SPORT BIO’s awards attests

and underlines the superior quality of the products (cp. RITTER SPORT, 2009o).

RITTER SPORT BIO’s online communication does not include any social media

activities, for instance on RITTER SPORT’s Facebook profile or Twitter blog, but

banner ads on Utopia, a “green” German internet platform, or the Brigitte website

(cp. company interview, see appendix).

Fig. 7 RITTER SPORT BIO website (cp. RITTER SPORT, 2009g; RITTER SPORT, 2009n)

3.5 Evaluation of the green product launch

3.5.1 Résumé of the company

Being an owner-managed, non-public company and therefore not publishing

quarterly reports, short-term returns are not of top priority for RITTER SPORT

(cp. Koch, 2008b). On this account, the company is enabled to evaluate the

success of its BIO range on a long-term basis, striving for a constant expansion of

volumes to ensure a profitability of the segment in the long run (cp. company

interview, see appendix). However, RITTER SPORT judges the launch of its BIO

13

range already today as successful and has good reason to be satisfied, looking at

its market leader position in the German organic chocolate bar market with a

market share of about 30 percent (cp. RITTER SPORT, 2009p). Moreover, all of

its BIO products are ranked under Germany’s 10 top-selling organic chocolates

and have already attained a 50 percent coverage of the German food retail market

(cp. company interview, see appendix; Handelsblatt, 2009). The promising start as

well as the outstanding test results and awards RITTER SPORT’s BIO range

obtained so far have encouraged the company to launch its fifth flavour,

Macadamia, in March 2009 and to intend to further extend the BIO segment in the

next years, also with regard to the expected growth dynamic of the German

organic food market (cp. Koch, 2008b; RITTER SPORT, 2009p).

3.5.2 Feedback of the consumers

From September to November

2009, a cooperation between

RITTER SPORT and the German

viral marketing platform trnd

allowed 2,500 trnd partners to test

the five RITTER SPORT BIO

flavours with their family, friends

and colleagues, to evaluate the

products and also to state

suggestions for improvement

(cp. trnd, 2009a). Fig. 8 trnd project blog RITTER SPORT BIO (cp. trnd, 2009)

Comments on trnd’s project blog as well as on consumer rating platforms such as

dooyoo, Ciao or Yopi reveal that RITTER SPORT BIO generally appeals to the

mass market consumer with a potential affinity towards organic food. The natural,

stimulating smell and the distinct taste of the organic chocolate are very well

received – with Macadamia as the favourite flavour. However, as taste is always

of subjective nature, the less sweet flavour of the organic bars is also a reason for

others to stick to RITTER SPORT’s conventional offer.

Moreover, the colourful packaging is commonly judged as appealing and suitable

for the product, also due to its recyclability. The more health-conscious testers,

14

however, miss the nutrition facts on the packaging which RITTER SPORT does

not indicate yet due to the limited space and considering the definition of “one

portion” as too difficult (cp. trnd, 2009b; trnd 2009c; Ciao, 2009; dooyoo, 2009;

Yopi, 2009; Hedewig-Mohr, 2008).

In many cases, the (higher) price despite the smaller product size is viewed as a

drawback and also as an obstacle to a regular purchasing of the RITTER SPORT

BIO – especially for those, who would purchase the organic alternative for taste

reasons only and do not attach a great value to health and environmental benefits.

Moreover, although appreciating the fact that RITTER SPORT BIO is available in

conventional supermarkets instead of organic grocery stores, customers criticise

the limited distribution of RITTER SPORT BIO compared to RITTER SPORT’s

conventional products.

Another drawback for completely switching to RITTER SPORT’s organic offer is

the limited number of BIO flavours, comprising mainly classical ones such as

Milk Chocolate or nutty flavours such as Raisins Cashew or Macadamia up to

now, which do not apply to every taste (cp. trnd, 2009b; trnd 2009c; Ciao, 2009;

dooyoo, 2009; Yopi, 2009).

Truly green consumers, on the other hand, also value RITTER SPORT BIO’s

potential to support organic food’s foray into the mass market and like the

intensive and more natural taste of RITTER SPORT BIO, but obviously have

more sophisticated demands towards organic chocolate: When purchasing

chocolate, an indulgence product, the importance of environmental benefits

generally outpaces the health aspect in view of the awareness and resentment

about cacao farmers’ abject poverty and child labour. Green consumers thus miss

the “Fairtrade” seal various traditional organic chocolate producers such as

Naturata or Rapunzel come up with and which they consider more important for

chocolate products than the “Bio-Siegel” (cp. focus group interview, see

appendix; Lippki, 2009). Apart from that, they appreciate RITTER SPORT’s

dedication to social and ecological matters as well as its sustainable approach

throughout the value chain, but feel insufficiently informed – some even did not

know about the company’s organic range.

As being accustomed to purchasing high-priced organic bars, RITTER SPORT

BIO’s premium price appears generally acceptable and justified to the green

customer group.

15

Due to the strong resemblance to its conventional advertising approach, RITTER

SPORT BIO’s print appearance tends to lack an immediate identification of the

products as being organic as well as credibility with green customers. The range’s

website is generally perceived as modern, appealing and positively rich in facts

about ecological and organic matters. However, due to a rather complicated

navigation, the retrieval of the desired information proves to be rather difficult

(cp. focus group interview, see appendix).

4. Conclusion

With its decision to launch an organic product range, RITTER SPORT has risen

to the great challenge of adapting its conventional procurement, production and

marketing approach to the demanding requirements of health and sustainability.

Despite the presently still low share of organic food in Germany and the

comparatively low organic affinity of an indulgence product such as chocolate,

RITTER SPORT BIO’s start proved to be promising: Whereas other organic

ranges of conventional companies such as “funny-frisch Bio Chips” from

Intersnack flopped, RITTER SPORT BIO has quickly gained a foothold in the

green market and even became market leader within one year (cp. Handelsblatt,

2009).

The reasons for RITTER SPORT BIO’s success are various: First, RITTER

SPORT BIO provides both (subjective) personal benefits such as high-quality

organic ingredients and a superior taste as well as more far-reaching

environmental benefits by ensuring a sustainable organic farming and fair

conditions for its farmers. Furthermore, the company’s long-time sustainable

approach to its procurement and distribution as well as to its economic activities

in general make RITTER SPORT’s launch of an organic product more

consequential and credible than other company’s short-term jumping on the

current eco-trend, especially for the well-informed green customer. In this regard,

the company’s comprehensive and appealingly designed website with in-depth

facts about RITTER SPORT’s wide-ranging commitment to social and ecological

matters represents a good way to inform and educate the surpassingly interested

and online-affine green target group (cp. Nikisch, 2008, p. 39).

16

Nonetheless, RITTER SPORT BIO also shows room for improvement in several

respects: In the first instance, RITTER SPORT initiated the launch of the organic

range rather out of company-internal motives such as its established cooporation

with Nicaraguan farmers but largely disregarded the gaining of a deeper

understanding of the target group’s values and its expectations towards organic

chocolate prior to the launch. However, a better knowledge of the organic-affine

customer would enable RITTER SPORT to target the BIO consumers in a more

purposeful way. Moreover, as RITTER SPORT already obtains most of its raw

material from fair trade, the company should consider the acquisition of the

“Fairtrade” seal resulting in being perceived as more serious and truly responsible

by the organic-affine clientele. The final shortcoming refers to the fact that

consumers prove to be insufficiently aware of RITTER SPORT’s organic offer as

well as its long-term CSR commitment. In this respect, the company has to strive

for an increase of both the distribution level of the BIO range and the respective

communication efforts. A comprehensive image campaign transparently

conveying the company’s dedication to sustainable economic management and

the consequent offer of organic products, for instance by impressively showing

the sustainable raw material production in Nicaragua, would help to tackle this

issue and would also correspond to and emphasize the company’s general

superior-quality approach. In view of the pro-activity and the high involvement of

organic-affine customers, RITTER SPORT should also strive for a more direct

and interactive communication with its BIO customers (cp. Nikisch, 2008, pp. 37-

39). While the corporation with trnd in fall 2009 already represented a

commendable step, the mutual benefit of a dialogue with the target group could be

further augmented with the help of social media activities such as a product blog

the company already initiated for the launch of RITTER SPORT Olympia in

2009.

Concluding, RITTER SPORT should proceed exploiting the growing potential of

the (German) market for organic food and strengthen its market leader position by

a continuous extension of its organic production and offering. In view of the

scarcity of high-quality organic cacao and the prospective number of followers in

the market, RITTER SPORT’s early move and its long-term investments in the

field of sustainable farming will represent a significant competitive edge today

and particularly in the years to come.

IV

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VII

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VIII

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IX

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X

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1&search_string=RITTER+SPORT+BIO&cat_id= [16 January 2010]

XI

Appendix

Key questions of the case study based on critical success factors of

green marketing

1. Market research

Did the company do an in-depth market segmentation in order to truly

understand needs and wants of the target group before the launch?

2. Product/service features

Do the product’s/service’s key features have a positive effect on either health,

the environment or both?

3. Product/service performance

Is the (perceived) performance of the green product/service better or worse in

comparison to the company’s conventional products?

4. Product/service benefits

Does the product satisfy both personal demands for performance or safety et al.

and environmental needs?

5. Price

How is the product/service price positioning compared to the company’s

conventional and competitive products?

Is the price perceived as fair by the consumers?

6. Distribution

Does the company succeed in establishing environmentally friendly and

sustainable procurement and distribution systems?

7. Communication strategy

a. Is the media selection appropriate for successfully accessing and attracting

the green consumer? Is the amount of information delivered sufficient?

b. Are the communication measures intensive and persuasive in order to

overcome the consumers’ gap between pro-environmental values and

actions?

c. Does the communication support an easy identification of the

XII

product/service as being green?

d. Does the advertisement show both informative environmental claims

and natural images in order to induce both a cognitive and an emotional

appeal?

8. Communication of credibility, reliability and trust worthiness

Is the company’s behaviour perceived as credible, reliable and sustainable by

successfully establishing and communicating

a. care and empathy for the environment

b. competence and expertise

c. openness and honesty

d. dedication and commitment?

9. Evaluation of the green product/service launch

Has the green product/service overall succeeded in

a. satisfying the customers?

b. meeting the financial/sales objectives?

XIII

Company Interview

Documentation of the interview with Ms. P. Fix (Press Relations

Officer, Alfred Ritter GmbH & Co. KG)

Berlin, 21 January 2010

Did RITTER SPORT conduct an in-depth market research prior to the

launch of the BIO range?

Yes, of course. We do market research studies for all of our products. We only

launch products that are well perceived by our surveyed consumers and meet

certain benchmarks.

Which benchmarks?

Sorry, but that is confidential.

How would you define the target group for the RITTER SPORT BIO range?

Would you describe them as rather “pro-active” green consumers?

No, we rather target “green-affine” consumers. If we would target green

consumers acting very strong according to their green values, they would not find

our products in their preferred “green” shopping locations, such as special green

supermarkets. We are a volume manufacturer and have difficulties to launch our

products other than in conventional super markets.

What is the age of your target group?

Between 25 and 40 years.

How would you describe your product strategy?

First of all, we have a clear competitive advantage with our unique chocolate

fillings, which is a general unique selling proposition of RITTER SPORT

chocolate. But in particular our ingredients are special, as our processed organic

raw materials are very hard to get. There are also always certain difficulties

attached to the organic ingredients, such as preservability. Moreover, in the course

XIV

of our market research studies we found that nuts are especially popular among

organic-affine consumers, an ingredient we obviously focused on.

How would you describe your distribution strategy?

As already mentioned, we find it difficult to have our products listed in organic

supermarkets. They usually don’t list any volume manufacturers like us.

Would you evaluate the launch of the BIO range as a success?

Yes! Despite the distribution level of 50 percent in the German food retail market

we are very proud of, we have to say that the organic segment is still very small,

quasi a niche. However, as we plan to expand our BIO portfolio, you can see that

we definitely evaluate the launch as a success.

Is the organic range already profitable?

Profitability is not the key point for us. We are a volume manufacturer. So we

hope to realize a continuous increase of organic chocolate sales in terms of

volume. Overall, we simply aim to increase the total quantity, so that the organic

range achieves profitability in the long term.

XV

Documentation of the interview with Mr. T. Seeger (Executive Press

Relations Officer, Alfred Ritter GmbH & Co. KG)

Berlin, 27 January 2010

Did you launch the BIO range in Germany only?

No, we launched the range in all our German-speaking markets,

What is RITTER SPORT BIO’s market position today?

We are the market leader, holding a market share of 30 percent.

And who is your key competitor? Sarotti, who already launched an organic

chocolate range in 2006?

No, Sarotti is not a key competitor for us as it is not a volume manufacturer as we

are. We actually don’t really have any big competitors. All our competitors are

small-sized manufacturers.

So you hold a unique position in the organic chocolate market among volume

manufacturers?

Yes, we do.

What is the share of the BIO line within the total RITTER SPORT

production?

It’s still rather small, only about 1 percent.

Your colleague stated that you conducted some market research studies prior

to the launch. Can you give us some details about these studies?

No, sorry, I can’t. That is confidential.

Did you test only the product itself or did you also research values and

expectations concerning organic products among the surveyed people?

Well, RITTER SPORT chocolate is a product people consume because they want

to indulge themselves. The challenge we faced was that people usually connect

organic food with less enjoyment. As we aim to offer a high level of product

XVI

enjoyment also for our BIO range, we put the research focus clearly on the

products’ enjoyment potential and sensory factors.

So you tested the products prior to the launch?

Yes.

But you did not test values or expectations regarding organic or green issues?

No, we didn’t.

What is the profile of your conventional target group and what is the profile

of the consumer you target with the BIO products?

Well, as we have a very broad portfolio, RITTER SPORT is clearly for everyone

and of every age. However, concerning our organic range, it is rather aimed at

women as they tend to be more conscious about what they eat. Also, we found in

our market research studies that they prefer smaller sizes for their RITTER

SPORT chocolate bars, which is why we launched a 65g bar for our BIO

products.

Do you address your existent consumers with the new range or do you aim to

win new organic-oriented consumers?

Of course, we are always happy to win new consumers!

When did RITTER SPORT have the concrete idea to launch an organic

product range?

This was around the turn of the millennium.

And when did you start with the actual preparations for the product launch

and the marketing mix?

Around 2006.

How is the RITTER SPORT BIO positioned in terms of price, also compared

to your conventional chocolate range?

For RITTER SPORT BIO, a 65g bar, we recommend a retail price of 0.99 euro,

for our conventional 100g bars a retail price of 0.85 euro.

XVII

Which reasons does RITTER SPORT state for this price difference?

We have to sell our BIO products at a higher price due to the considerably higher

purchasing price of high-quality organic ingredients – a result of the scarcity of

the organic raw material compared to our conventional ingredients. We hope that

our clients value RITTER SPORT BIO’s superior benefits and quality as well as

the distinct taste and therefore accept the premium.

Do pay a price premium “only” for the cacao farmers in Nicaragua, or also

for the farmers in Ecuador, Peru and the Dominican Republic who also

produce the organic cacao? We only found information regarding the

Nicaraguan farmers.

Well, you find mainly information about the situation in Nicaragua, because there

is the focus of our special commitment we pursue since the project “Cacaonica”

was initiated, in 1990. But in general, RITTER SPORT is always looking for the

best quality available, which is why we are willing to pay the famers a price

premium so that they are motivated to grow high-quality cacao.

So not only the farmers in Nicaragua get a price premium above the world

market price?

No, every farmers we have trade relations with.

What is the distribution level for the BIO range?

It’s around 50 percent.

Regarding your distribution strategy, do you have any selected key accounts?

No. In Germany, there are only a few but very big supermarket chains. So we try

to get RITTER SPORT BIO listed in all of their outlets. However, we do not

approach discounters.

What was/is your communication strategy for RITTER SPORT BIO?

Due to the inherently high product costs of the BIO range as a result of the

expensive raw material and the necessary adaptions of the production process as

well as due to the fear of waste coverage because of the limited size of the

XVIII

organic-affine target group, we decided to keep the communication efforts for

RITTER SPORT BIO rather low.

With regard to offline measures, we run advertisements in selected sophisticated

women magazines such as Brigitte or FÜR SIE for several weeks and provided

some POS material such as posters or displays.

Referring to the online communication, we created a specific product website as

part of our revamped web presence which was launched shortly before the BIO

launch. This RITTER SPORT BIO sub-website provides a lot of details about the

organic products, the production process and several background information

about our ecological commitment. Thereby, we aim at giving our interested

customers a good insight into our activities.

What about social media involvement?

At the moment, we do not run any social media activities for BIO. However, what

we did were banner ads on relevant websites such as Utopia.de or Brigitte.de, for

example for our RITTER SPORT BIO “Organic angel or pleasure lout?” online

sweepstake we run during the last months.

XIX

Focus group interview

Documentation of the qualitative discussion with ten green consumers

(selected relevant statements)

Berlin, 24 January 2010

Introduction

Which is your primary intention when buying organic food, chocolate in

particular? Are you motivated by self-interest health reasons, by the desire to

do something good for the environment or based on both concerns?

“Both.”

“Might be both, but fair trade is definitely a very relevant criterion for me.”

“For me, when it comes to organic chocolate, environmental concerns are

dominant. When buying other food, health benefits are of course very important,

but I expect that chocolate is not a healthy product anyways.”

RITTER SPORT, commonly known as a producer of conventional chocolate

products, offers a RITTER SPORT BIO range comprising five flavours

(Raisins Cashew, Almond Slivers, Milk Chocolate 35% and Fine Extra Dark

Chocolate 60%) made of organic ingredients since April 2008.

Although being a mass market company, RITTER SPORT has a long

tradition of ecological and social commitment, e.g. supporting fair and

sustainable farming in Nicaragua or investing in renewable energies.

Were you aware of RITTER SPORT’s BIO range?

“I might have seen it once.”

“No.”

“I was aware that RITTER SPORT is somehow dedicated to sustainability, but

haven’t known about their organic range so far.”

XX

Do you appreciate RITTER SPORT to make a foray into the organic

market? Why or why not?

“Yes, definitely. It’s a good sign that green food is becoming more and more

popular.”

“If it is not just “greenwashing”, of course. Companies in general should take

more responsibility for their consumers, the workers in the production and the

effect of their products on the environment. RITTER SPORT’s organic range is a

good step, but there is of course more to be done.”

“Yes, I do – and I hope that many more conventional companies will follow.”

“Yes, I think it’s a good move. I like the fact that organic food becomes more and

more cheaper and easier available, that I can buy it at my supermarket and not

only in special grocery stores.”

Have you ever tried RITTER SPORT BIO?

“No, never.”

Product

You have now the possibility to try both RITTER SPORT BIO milk

chocolate and the traditional RITTER SPORT milk chocolate. How do you

assess the taste of the organic bar in comparison to the conventional bar?

“I really like the organic bar – it is more smooth melting and less sweet. I

definitely taste a difference.”

“Yes, I also like the taste of the BIO one, the natural flavour I’m used from other

bars from traditionally organic brands such as Alnatura, Rapunzel or Naturata.”

“The organic bar definitely tastes more intense, more like cacao and less like

sugar. It is really delicious.”

“For me, there is not too much of a difference – but yes, the flavour of the organic

bar is somewhat stronger.”

XXI

After testing both bars, would you ascribe a higher quality to the organic

product than to the conventional one?

“Yes, I would – because of the more intense flavour.”

“Somewhat, yes.”

Would you assess RITTER SPORT BIO as easily identifiable as an organic

product?

“Yes I would, because of to the “Bio-Siegel”.”

“At first sight, not really.”

“The two-coloured packaging which looks different to RITTER SPORT’s

conventional bars was the first thing to catch my eye, but I wouldn’t have

assumed that it is an organic product. From my point of view, the “Bio-Siegel”

has to be larger to be more striking.”

RITTER SPORT BIO does not have a “Fairtrade” seal yet many traditional

organic chocolate manufacturers come up with. Would you appreciate it if

RITTER SPORT obtained a “Fairtrade” seal as well or is that irrelevant to

you?

“Definitely.”

“I am used to the “Fairtrade” seal from many organic brands I buy and I would

really appreciate if RITTER SPORT BIO would come up with it as well. For me,

it would be sign of a 100 percent dedication to sustainability and also increase the

company’s credibility and popularity as a provider of organic products.”

“Of course, for me it would be even more relevant than the “Bio-Siegel”. After all

you hear about the often miserable conditions of cacao production, I really value

if a company is committed to fair trade and it is also an important criterion for my

buying decision.”

“Yes, just recently, I have read about child labour on cacao farms. Therefore I

think fair trade is a very crucial point.”

XXII

Price

RITTER SPORT BIO‘s 65g bars are priced at 0.99 Euros, whereas the

conventional RITTER SPORT 100g bars are available for 0,85 Euros.

Bearing in mind the organic ingredients and having tasted both bars, do you

agree to the higher price of RITTER SPORT BIO, is it justified in your eyes?

“Totally, it is still below 1 euro and I think that’s totally acceptable for an organic

product.”

“I would pay it, as you really taste a difference.”

“I think so, but I would like to learn more about the reasons for the price

difference.”

“A price of 99 Cents for an organic chocolate bar is definitely okay, I have seen

much higher prices in organic grocery stores.”

Distribution

RITTER SPORT pursues a sustainable approach throughout its entire value

chain. Is that of importance or is that irrelevant to you?

“Of course I appreciate that RITTER SPORT apparently has a more

comprehensive approach to sustainability than just the production of the

ingredients.”

“I haven’t known that up to now, but it is definitely a good thing that they do it.”

“I think that’s very commendable. Why don’t they communicate this fact more,

maybe on the packaging? I haven’t heard about this fact either.”

Communication

Here you see a copy of RITTER SPORT’s print advertisment for BIO. Does

it appeal to you? Do you think it is well suited for a green product?

“In general, I like it. However, I wouldn’t realize at first sight that it is an ad for a

new, organic bar as it looks very much like RITTER SPORT’s common

communication, except for the “Bio-Siegel” on the upper edge.”

“Yes, me too. It’s a bit too “mass-market” in my eyes.”

XXIII

“You are right. Maybe they could focus more on the organic ingredients and

provide additional information, for example about the production.”

Now we take a look at RITTER SPORT BIO’s website. How do you evaluate

the brand’s web presence? Are you able to (easily) find the information you

are looking for?

“I like the amount of information I find on the website. I really get a good insight

in what they do and learn more about facts I haven’t been aware of. The video

about the sourcing of the ingredients is very entertaining as well.”

“They really did a good job with this website, the bright colours and the design in

general are very appealing. However, navigation is rather hard and finding the

information I’m looking for, the nutrition facts for example, somewhat time-

consuming. They should improve this aspect, maybe with a fixed navigation bar.”

“In general, I like the appearance of the website, it looks very fresh and modern.

However, the amount of information might be even a bit too high. They could

focus a bit more in this respect as I hardly have the time to read through all the

different articles. I also find the navigation a bit confusing, not very logical in my

eyes.”

“I am also positively surprised by the modern look, very in line with their other

communication measures. Although appreciating the idea of the “Biolexikon”, it

proves to be different from what I expected – more a collection of articles than a

real encyclopaedia. But nevertheless, I like the information they provide, really

interesting facts.”

RITTER SPORT is dedicated for social and economical responsible activities

for years. Have you been aware of that? If yes, would you assess the

company’s commitment as credible?

“No, I haven’t so far.”

“Possibly – I guess I’ve heard or read it once, but have no clue to which extend or

what they do in detail respectively. So it’s hard to judge their credibility. But in

general, I have a trustworthy impression of the company.”

XXIV

“I knew that the company is committed to sustainability and really appreciate that.

I also would like to find out more details on their activities to be actually able to

judge the credibility of their efforts. But from what I have learnt about them yet, I

would evaluate them as trustworthy, also due to their long tradition and their

general approach and advertising.”