Ben Jerrys

This essay has a total of 2694 words and 16 pages.

Ben Jerrys

Ben and Jerrys marketing stratgies
Ben & Jerry・s was experiencing a steady growth within their sales figures from 1990 to
1993. However, In March 1994, Cost of Sales increased approximately $9.6 million or 9.5%
over the same period in 1993, and the overall gross profit as a percentage of net sales
decreased from 28.6% in 1993 to 26.2% in 1994. This loss might have been a result of
several reasons, such as high administration and selling costs, a negative impact of
inventory management, and start up costs associated with certain flavours of the new
:Smooth, No Chunks; ice cream line.

Ben & Jerry・s selling, general and administrative expenses increased approximately 28% to
$36.3 million in 1994 from $28.3 million in 1993 and increased as a percentage of net
sales to 24.4% in 1994 from 20.2% in 1993. This increase might reflect the increase in
marketing and selling expenses and the increase in the company・s administrative

Ben & Jerry・s loss was not solely due to their employee orientated approach, but they
appeared to have taken out a vast amount of capital lease in their aim to automate their
production to keep up with the intense competition.

As reflected in the balance sheet, Ben & Jerry・s had reinvested huge amounts of property
and equipment in 1994 increasing their long-term debts by almost 45% in 1993.

Alternatives available to the consumer now, and in the foreseeable future

Haagen Dazs is currently the main competitor in the concentrated market place for super
premium ice cream. Substitutes are however available. There are other ice creams not in
the .super premium・ category. To an extent, these are real competitors. However for the
market B&J caters for the up market 25-40・s with a high disposable income} their
strategies should not have a great impact on B&J. The frozen yogurt lines which B&J now
provides, has a number of direct competitors to deal with.

Dealing with other substitutes is not that simple. Expensive (or not) chocolate, cakes,
croissants and other post meal consumables are realistic options for the consumer. Ferrara
Rocha will assure you that their product is the perfect accompaniment to any meal. B&J
need to be wary of this. How he/she makes the choice for ice cream (as opposed to
chocolate etc.) and then super premium (as opposed to premium or ordinary) and then B&J
(as opposed to Haagen Dazs etc.) is essential. [See section 3.21 Research]

The possibility of a rival ceasing B&J・s place as no.1 or no.2 in the marketplace?

Despite after tax losses in ・94 both B&J and Haagan had a 42% share in early ・95. None
at present seem to have the ability or financial backing to challenge this, albeit Edy・s
has Nestle.

The possibility of new entrants in the market place is confined by two major problems. The
brand and distribution. Remembering that these are upmarket consumers where by cheap
alternatives are not necessarily sought for then the key element is the brand. This brand
and the associated image are something currently only Haagan and B&J have. This emotional
tie related to B&J・s and everything it possesses beyond what it is in itself (i.e. a good
tasting ice cream) is something that will be difficult to emulate. It is a question of .I
wouldn・t be seen dead eating another ice cream・ as opposed to .this is cheaper and
tastes just like B&J・s so I・ll buy this from now on.・

The other barrier concerns distribution. With ice cream the idea of selling products
through the Internet, despite the dried ice, which may accompany it, is not likely to be
an option V the consumers will not readily enthuse over the idea. B&J・s is a fresh ice
cream and by nature difficult to transport. Consequently distribution to stores around the
USA and globally will be expensive and require partners such as Dreyer・s that have an
extensive transportation network. It must be noted that this is potentially a concern or
risk for B&J・s. Having a rival manufacturer distributing their ice cream is likely to
cause conflict, and B&J should change this immediately or have an adequate contingency
plan .

With both the above barriers the key entrants may be the other ice cream manufacturers in
the premium or ordinary market, notably the premium. As it is these that already have the
distribution network as well as the know how. It will still take a large investment for
these manufacturers to sell their image.

Internal Issues

Due to the baby boom in 1994 the target market of Ben & Jerry has declined vastly.
Although Ben & Jerry still hold a large percentage of the small market share, the company
needs to decide on whether this target segment is worth sticking with.

At one stage Ben & Jerry・s pricing strategy worked really well, however it has become
evident that demand over recent years has shifted towards lower priced products leaving
pricing strategies being a big issue for the company. Until 1994 all of Ben & Jerry・s
promotions were gained through the company・s socially conscious practices. However price
wars with main competitors left the company having to pull funds off advertising campaigns
to fund price discounts and store coupons.

Due to the fact that imitations for the product are being developed more rapidly, Ben &
Jerry have changed their primary marketing goal to establish products that cannot be
imitated but the technological developments of the company have not allowed them to launch
the products within a realistic time limit. B&J・s mission statement includes the need,
quite rightly, for a wide variety of innovative flavours. Five years to find the perfect
coffee bean seems unnecessary. Coffee ice cream, in this period, may have become
unattractive to the customer. What if after this period the product failed to penetrate
the market? This scenario is compounded by,

- The quick replication by competitors
- The high costs related to manufacturing each different flavour

As a result it is key to cease brands not received well, as well as introducing new
flavours quickly. .Flavour of the month・ may be a way of bringing consumers to them on a
regular basis.

To identify what the consumer wants and cannot receive elsewhere, what he/she detests and
what they would like to improve is important. Although there are some signs of B&J
carrying out consumer research it is essential to introduce continual focus groups or
panels. It may be the case that a good ice cream is not selling well due to expense, lack
of marketing or its just too different to comprehend trying.

Research will be key in identifying the market in any region or country B&J wishes to
operate, especially into consumers・ needs and wants. The way choices are made needs to be
understood and the positioning of B&J needs to accommodate this. The decision is based,
amongst others, by the mood of the potential consumer at the time of decision, the tastes
of the accompanying friends V group decisions are likely to be an integral element,
convenience of supply and time available.

Ben & Jerry seem to be proud of the success rate of their relaxed, casual culture and
having employees involved in the decision making. However this policy needs to be reviewed
as decisions are taking too long to be made due to large staffing numbers but with staff
turnover at a low twelve percent, changing the decision making process could be very

If it is not bad enough that the company is loosing market share, the company putting more
funds into promoting their image than to them is irritating shareholders even more. A
happy medium will have to be found for Ben & Jerry to gain confidence back from their

The extent of internal rivalry amongst the established firms within the industry.

Ben & Jerry exist in a consolidated market place with just two major players. The other is
Haagen-Dazs. There is severe competition between the 2 players.

If this rivalry is weak then companies have an opportunity to raise prices and earn
greater profits. However, if rivalry is strong significant price competition including
price wars can occur. Price competition limits profitability by reducing the margins that
can be earned on sales, which could push the industry profits down in the process.

Ben & Jerry・s competitive structure seems to be consolidated. The more commodities like
an industry・s product the more vicious will be the price war. The nature and intensity of
rivalry in their industry is much more difficult to predict. As the companies are
interdependent competitive actions of one company will directly effect the profitability
of others. Companies sometimes seek to reduce this (price war) by following the price lead
set by the dominant company in the industry.

The demand conditions also affect the intensity of internal rivalry between companies.
Growing demand tends to reduce rivalry as companies can sell more without taking market
share away from other companies, resulting in high profits. Conversely declining demand
results in more rivalry as companies fight to maintain revenues and market share.
Therefore Ben & Jerry exist in a mature industry where there is declining demand; creating
intense rivalry with Haagen Dazs.

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