Toblerone pricing at airport duty-free shops

• Main Authors: KUMAR, Nirmalya, BHATTACHARYA, Lipika
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Marketing; Pricing strategy; Consumer Marketing; Sales
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/475; https://cmp.smu.edu.sg/case/5986
• Institution: Singapore Management University

This case discusses Toblerone chocolates’ pricing strategy at duty-free shops in international airports and entails 15-20 minutes of reading time. It analyses how the world-renowned Swiss chocolate brand Toblerone created a successful market strategy for duty-free shopping, and why it is considered one of the most iconic brands in duty-free stores worldwide.Central to the case is the assessment of Toblerone’s variable pricing strategy across different airports, and whether duty- free prices are lower than local store prices. What is the rationale behind Toblerone’s pricing strategy? Is duty-free shopping actually cheaper? Adding depth to the analysis, the case also evaluates the pricing strategy of other products such as duty-free favourites like alcohol brand Johnnie Walker and electronics brand Apple iPhone, providing valuable comparisons. The Teaching Note supplements the case by comparing Toblerone prices to Dairy Milk, fostering a more comprehensive discussion. The goal is to offer insights into Toblerone's strategic approach to pricing within the unique context of duty-free markets and to stimulate thoughtful discussion on its sustainability and effectiveness in meeting consumer expectations. The case helps students understand: (1) how pricing of products is not necessarily cost based (2) many factors can impact the prices set including consumer, competition, channels (retailer strategies), company (brand image versus maximising profits), and context (like regulatory frameworks, geography, local culture, etc.) (3) exemption of taxes may not necessarily result in lower prices (4) duty-free stores are expensive to operate and engage different pricing tactics than local retail stores.