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The Start
Ten years ago, Katrina Markoff started Vosges Haut-Chocolat in Chicago to make and sell premium quality chocolate. During this time, Vosges has moved from a tiny start-up to a well-known, high-end chocolate brand with revenue over $12 million in 2007. It is based in Chicago and has 80 employees. Vosges is known for its chocolate bars and truffles made with exotic, unexpected flavors. Katrina Markoff’s company is looking to own the very high-end marketspace in chocolate. Katrina decided to pursue this space when she realized that the two major areas that chocolate manufacturers occupied were the high-end which Godiva owned, and a lower-end which was one step up from drug store chocolates. She decided to out-flank Godiva on the very highest level.
Location and Marketspaces
Vosges Haut-Chocolat has five stores: two in Chicago, two in New York, and one in Las Vegas. In addition, Vosges is opening a store in Los Angeles. As with all retailers, location is critical to success. Because Vosges is a very high-end product, store locations are even more important than normal. For Vosges, geography is a critical access point to its marketspace. It is a paramount factor to gaining consumers willing to pay premium prices for chocolate. All its store locations need to link geography to a luxury-seeking demographic. In my white paper, “Innovating Your Marketing Strategies”, I talk about this Kaleidoscope marketspace factor. In this case, geography links directly to demographics, and dictates the ability to sell a certain kind of item at a premium price point.
The Two Key Ingredients For Vosges’ Stores
Vosges needs one of two ingredients for the success of its retail locations: high foot traffic or to be a point of destination. For its Chicago and New York stores, Vosges seems to combine both, with high foot traffic areas and high-end locations. Although the New York locations are relatively expensive, the exposure and awareness gained for the brand justify the costs. As for the upcoming Los Angeles store, it must be in a destination location, because this market does not have a lot of foot traffic. Geography (as it relates to the demographics of foot traffic) is vital to the Chicago and New York stores, because it dictates the likely customers. This is vitally important to Vosges because theirs is a luxury product with a relatively high-price point – it can’t be situated just anywhere. The Las Vegas store does not seem to have either of these elements working strongly in this way. One might argue for Vosges to emulate the Starbucks model of trying to market a ubiquitous affordable luxury with its own locations in geographies with mid-range demographics. However, the nature of the product as a non-staple food item, and relatively non-habitually consumed, makes it unlikely to be successful in non high-end locations.
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Creating Goodwill
Ethical business behavior and practices for companies creates goodwill, and can positively impact the bottom line. Look at the brand awareness created by Target and its community activism, and how that makes their customer want to shop at their stores and “give them business.” For individual business-people, ethics are a badge of personal credibility. Like goodwill for a company, in networking circles it brings deals, sales, and customers. For both the company and the individual business-person, they must stand behind their products, and provide reasonable follow-up servicing. Consumer trends indicate that service is a huge differentiating factor, especially for “big ticket” items such as cars, televisions, furniture, appliances, etc. For business people, service takes on the form of following up after a deal or sale, or adjusting and customizing services to the specific needs and desires of your customer.
Impact of Goodwill with Customers
Goodwill is measurable and highly elastic, which allows a company or person to earn a premium ethically. The additional sales that are generated by customers feeling good about your product or service has an elastic factor in the sense that it will cause them to buy from you at a higher proportion than if they felt indifferent. This effect can be directly measured in increased “pocket share” for current individual customers, and the amount of new customers obtained through referrals. These numbers are real and important to your business.
Ethics Fade, Societies Fall
It is interesting to see throughout history how the fall of ethics in a society preceded the collapse of that society, empire, or nation. Look at the Roman Empire, Greece, the French Revolution, and other collapses and it’s likely they started or were emblematic in their non-ethical businesses activities and that spread to their core institutions. Positive activism – not only just by the elite but with everyday people – is right and dutiful. We must all remember that people doing right by each other in business and activities translates into morality in our society – and that’s the whole point, isn’t it?
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Ethics’ Impact
Ethics and ethical business practices are as paramount to a well-functioning and flourishing society in the modern world as they were in the ancient world. Ethics are important because business is everywhere – nearly every activity in society has a business component or is part of a money-using or -generating activity. Non-profit organizations and charities even have to balance revenues and expenses to stay viable for the people that they help. Health care – the way that our society takes care of the sick and elderly – is a huge and complicated business which the United States and its government is still trying to get its arms around. Our legal system – the way that we keep order in society – is directly affected by the monetary aspects of law firms, prosecutors, incarceration costs, and the wealth of a defendant. The quality of education for young people and the ability of institutions at all levels are directly affected by the revenue that they generate. And government, especially in the U.S., dispenses trillions of dollars in citizens’ taxes according to lawmakers and legislators – it’s the biggest business of all.
Do Right By Customers
It is critical to society that all these entities do right by their “customers,” and when they don’t – there are dire consequences. Each entity in society must appropriately service the people that use or need what that entity provides. When governments fail to effectively regulate food production practices, such as with the recent melanin-tainted formula in China which led to tens of thousands of sick Chinese babies and deaths, the ethics of lax enforcement of laws is fatal. Here in the Western world, we have our examples too. Our oil companies seem to always put the accelerator to prices during “perceived” crises, such as in the weeks after a hurricane in The Gulf of Mexico and during peak travel times like early summer. Do you really believe that “changeover to summer blend at the refineries” stuff can raise a gallon of gas by 20% to 40%? Doing right by American drivers would see a proportionate lowering of gasoline prices as barrels of crude oil fall. As I write this, oil is at about $80 per barrel, down nearly half its $140 per barrel peak – is a gallon of gas down to $2 per gallon or even $2.50 per gallon?
T. Boone Pickens and Bill & Melinda Gates’ Activism
Business people and their activism can have a huge impact on society. Relevant to my last paragraph, oilman T. Boone Pickens is to be applauded for his crusade to help make America energy-independent. His advocacy and as important, his financial backing of energy-generating wind turbines has the potential to change America’s oil addiction. His effort is especially impressive and scarily enlightening and insightful when you consider his multi-billion dollar fortune comes from oil. He understands better than most, the consequences of America’s huge oil consumption, and the box that foreign oil dependence puts us in currently – and will cause us further desperation in the future if we do change both the oil demand and energy supply side. Bill & Melinda Gates and their foundation’s emphasis on education can also change America. Their participating academic institutions are developing and implementing ways to use technology to advance American education – and more importantly provide needier young people with access to current technology. This helps level out disparities between affluent and less affluent areas and locales.
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