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Ben & Jerry’s Homemade Inc. Presented by: Jared Young August 2002. Session Objectives. To discuss and understand whether to wholesale, or not to wholesale To show that some products are more efficiently distributed through strong ties with independent wholesalers. Session overview.

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Ben jerry s homemade inc l.jpg

Ben & Jerry’s Homemade Inc.

Presented by:

Jared Young

August 2002


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Session Objectives

  • To discuss and understand whether to wholesale, or not to wholesale

  • To show that some products are more efficiently distributed through strong ties with independent wholesalers


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Session overview

  • Background

  • Major issue

  • Situation analysis

  • Identification and evaluation of alternatives

  • Recommended strategy

    • Implementation plan

  • Conclusion


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Company background

  • Vermont based manufacturer of ice cream

  • Founded 1977 by Ben Cohen & Jerry Greenfield

  • Annual turnover: $155M

  • Mission

    • Give consumers a good, high quality ice cream product, while designating a portion of the profits to support social and environmental issues


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Caring capitalism

  • Societal marketing concept

    • Quality of life and social responsibility in a specific community

  • Ben & Jerry foundation

    • Donates 7.5% pre-tax profits and free ice-cream to charities


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Product range

Gifts

Super premium ice

cream

(also in low fat)

Premium ice cream (super-market range)

Conscious Concoctions

(specialty

ice cream)

Frozen yoghurt

Novelty items

Sorbet

  • Over 50 innovative flavours (and names)

  • Mostly pint size and bulk containers

  • Environmentally friendly packaging


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Community involvement

  • Social programs

    • Conscious Concoctions

    • Circusmobile

  • Use advertising budget to return something to the consumer and promote consumer activism

    • Sponsorship of peace, music and art festivals

      • 6% of sales is budgeted for promotion


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Influences on channel design

  • 1985 – novelty ice-cream

    • Consumers were not prepared to pay for a super premium product in supermarkets

    • However, sales improved by 60% when shifted to convenience stores

  • Mail order (choose from 6 flavours)

  • Internet

    • Flavours and social awareness events

    • http://www.benjerry.com


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Current channel structure

Mail order &

internet

Wholesalers

International

Licenses

Franchisees

Supermarkets

& Convenience stores

Company

stores


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Current issues to address

  • Maintain product quality image

  • Control over ‘concerned citizen’ image

  • Clear focus on societal issues

  • Accountable to stakeholders to make profits

    • Charities, employees, franchisees etc.

  • Need to review their channel structure

    • growing company with multi-channel distribution strategy (^ stakeholders = ^ pressure for profits)

  • Provide opportunities for future growth


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Apparent problem

  • What is the most effective way to manage the wholesale function for a super-premium ice-cream product in domestic markets while maintaining a socially responsible marketing orientation?


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3 types of wholesalers

  • Merchant

    • buying, taking title to, storing and handling products in large quantities

  • Agents and brokers

    • independent, do not take title, negotiate buying and selling, charge fees

  • Manufacturer wholesaling offices

    • owned by manufacturer, store and distribute products


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Independent Merchant Wholesalers

  • Independent regional ice cream distributors

  • Dreyer’s Grand Ice Cream (exclusive agreement)

    • Ben & Jerry’s of New York

    • Edy’s Grand Ice Cream distributors

    • Some sub-distributors


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Advantages and disadvantages of using independent wholesalers

  • Disadvantages

    • less control over logistics and image related factors

    • may have competing interests

    • potential for conflict

    • Others?

  • Advantages

    • specialists

    • efficient

    • existing facilities

    • market coverage

    • sales networks

    • market information

    • small order processing

    • Others?


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Advantages and disadvantages of Owning the wholesale function

  • Disadvantages

    • not wholesale specialist

    • high investment costs

    • possible reduction in sales networks and market information

    • Others?

  • Advantages

    • greater control over logistics and image related factors

    • flexibility

    • Others?


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Company strategic analysis function

  • Internal analysis

  • External analysis

  • Competitor and

  • Market analysis


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Relevant strengths function

  • Gourmet quality, natural ice cream

  • Good corporate citizen

  • Loyal customers

  • Positive media attention

    • Underdog that represents everyman’s interests

  • Innovative

  • Good relationship with distributors

    • Key to growth

  • Other Strengths?


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Intensity function

Import-ance

High

Medium

High

  • Good corporate citizen

Med

  • Gourmet quality, natural ice cream

  • Positive media attention

  • Relationships with distributors

  • Innovative

  • Customer loyalty

Strengths Matrix


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Relevant weaknesses function

  • Perishable product

    • Difficult and expensive to store/transport

    • Requires specialist equipment

  • Use of multi-channel strategy for a niche product

    • Increasing number of stakeholders creating potential for channel conflict

    • conflict between profits and social responsibility

  • Difficult to control channel members especially in socially responsible marketing philosophy

  • Any other weaknesses?


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Intensity function

Import-ance

High

Medium

High

  • Channel control

Med

  • Potential for channel conflict

  • Perishable product

  • Specialist requirements

  • Need to satisfy stakeholders

Weakness Matrix


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Relevant Opportunities function

  • Changing socio-cultural lifestyles

    • destination shopping, entertainment, experiences and novelties.

  • Changing attitudes towards healthy eating (eg low fat, natural ingredients and lactose free)

  • Further exploitation of good corporate image

  • Market development eg use franchising to target tourists and special occasions etc

  • Expand product lines and/or retail concepts eg gift shops

  • Increasing use of technology

  • Any other Opportunities?


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Probability of success function

Potential

Attract-iveness

High

Medium

High

  • Gain control over channel

Med

  • Use technology for market penetration

  • Exploit good corporate image

  • Changing attitudes, lifestyles and behaviours

  • Market development

Opportunity Matrix


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Relevant Threats function

  • Rely heavily on free publicity (risk of negative publicity)

  • Growth could bring conflict

  • Depleting supplies of quality ingredients for conscious concoctions

  • Negative attitudes to fat/milk products

  • Increasing reliance on high cost technology

  • Competitors

  • Any other threats?


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Probability of occurrence function

Potential

severity

High

Medium

High

  • Risk of negative PR

  •  Depletion of quality ingredients

Med

  • Increasing reliance on high cost technology

  • Competition

  • Channel conflict from growth

  • Negative attitudes to fat/milk products

Threats Matrix


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Competitor analysis function

  • Direct competitors

    • other firms selling premium ice cream

      • Haagen-Dazs (Pillsbury)

  • Indirect competitors

    • other firms selling ice cream

    • less direct firms are selling other treats or cold refreshments such as soft drink, beer or ice blocks


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Market analysis function

  • Increasing market share through ‘scoop shops’ and supermarkets but who are their target markets?

    • Purchasing for special occasions or as a treat

      • Birthday, celebrations etc

      • Tourists, people on holidays

      • Café and restaurant patrons (eg picnic point)

      • Movie patrons or other entertainment


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Strategies for growth function

  • Ansoff’s growth option matrix

Existing ProductsNew Products

Existing MarketsMarket Penetration Product Development

New MarketsMarket Development Product Diversification


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Should we do the wholesaling or use intermediaries to take advantage of growth opportunities?Did anyone identify a different case issue?

What is the major issue?


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Identification of alternatives intermediaries to take advantage of growth opportunities?

  • Retain current arrangements but strengthen alliances

  • Own the wholesale division (forward integration)

  • Gain administrative control by establishing a manufacturer-wholesaler franchise

  • Use dual channel strategy by establishing own wholesaling for more selective outlets

  • Others?


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Evaluation criteria intermediaries to take advantage of growth opportunities?

  • Minimise channel conflict

  • Be socially responsible

  • Cost effectiveness

  • Control product quality

  • Sustain competitive advantages

  • Maximise flexibility for sales growth

  • Customer loyalty


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Should we use any other criteria for evaluating alternatives?Which are the least important?




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Recommended short-medium term strategy – Alternative A on each of the criteria

Maintain current channel strategy BUT

  • Develop strategic alliances with intermediaries

    • Motivation to engage in socially responsible activities

    • Shared goals

    • Shared benefits

    • Seamless distribution

    • Basis for channel member selection

  • Implement stronger control mechanisms

    • Greater accountability

    • Performance measurement


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Implementation plan on each of the criteria

  • What needs to be done?

  • Who is responsible?

  • When should the strategy be implemented?

  • How will we measure success?


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Conclusion on each of the criteria

  • Good relationships with channel members results in greater opportunities for success

  • A dominant manufacturer desiring significant levels of control (to protect and enhance its public image) can often benefit from forward integration

  • Manufacturers with products requiring specialist storage and transportation expertise should use independent wholesalers

  • The use of strategic alliances in the channel provides win-win solutions for all, greater control and accountability and seamless distribution


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