Ben and Jerry’s marketing strategies

Ben and Jerry’s marketing strategies Ben ; Jerrys were 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 flavors of the
new Smooth, No Chunks ice cream line. Ben ; Jerrys 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 companys administrative infrastructure. 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 25-40s 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.

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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 Edys 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 up market 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 Ill 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 companys 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 flavors. 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 flavor As a result it is key to cease
brands not received well, as well as introducing new flavors quickly.

Flavor 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 difficult.

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 investors.

The extent of internal rivalry amongst the established firms within
the industry. Ben ; Jerry exist in a consolidated marketplace 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
industrys 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. Buyers
Ben ; Jerry’s customers have no switching costs. Therefore Ben ; Jerry
have to be aware of upcoming price wars, to avoid losing customers to
their rival. Hence Ben ; Jerry’s customers have high bargaining power.

For example, during economic instability consumers are reluctant to
spend their money on luxury products such as super premium ice creams.

How much power can a supplier have? Ben ; Jerry’s Supplier of milk and
cream comes from Vermont Dairy farms which charge a higher price but
do not use any genetically engineered drugs (rBGH). Their supplier of
milk has increased bargaining power as a direct result of Ben ;
Jerry’s principals, which in this case is, “h Health issues. “h To
protect smaller farms. Most of their suppliers are scattered around
the world such as, “h South African rain forest, which supply Nuts. “h
Passamaquoddy Indians, which supply their Blueberry. “h Georgia, which
supply their peaches. High costs in transportation and research are
inevitable. The coffee beans used in their coffee-flavored ice cream
took the company five years to find; therefore one can imagine the
high costs involved. Ben & Jerry also put money pack into the
suppliers. This in turn establishes strong relations between company
and supplier; for example the brownies used in their Chocolate Fudge
Brownie Ice Cream are purchased from bakeries, which employ under
skilled workers. Doing so gives the supplier greater comfort and
reassurance with better bargaining power, why? Because Ben & Jerry
prefer to select their suppliers who have greater social morals. What
Social and Economic Factors affected B&J? In 1994, sales were flat,
profits were down, and the company’s stock prices had fallen to half
its value. While Ben ; Jerry had thrived in the 1980s, the coming of
the baby boom in the 1990s meant a middle class society that was more
health conscious {the target market which Ben ; Jerry gained much
success on}. The company realizing its fall in sales quickly responded
to the changes in consumer demands and introduced Ben ; Jerry Lite.

This line failed miserably. It seems like that Ben ; Jerry failed to
forecast and acknowledge the changing in consumer tastes, and was
faced with increasing competition with Haagen-Dazs, which introduced
its low-fat Ultra Premium ice-cream. Their social commitments to
their customers community and suppliers have contributed to a
successful and unique image, Ben ; Jerry donated a portion of their
sales from their Rainforest Crunch Ice Cream back into
environmental preservation causes in South America. Ben ; Jerry also
established the Ben ; Jerry Foundation, which donated 7.5% of its
pre-tax profits helping non-profit organization, such as, “h An
establishment in New York to help drug addicted pregnant women. “h
Individuals and families affected by the AIDS virus in Brattleboro.

Such efforts had contributed to winning over like-minded
consumers, however its arguable to what extent this will have on
winning the hearts of international consumers. The question then
arises, to what extent does their social unique image affect their
consumer behavior? Swot Analysis for Ben ; Jerry Strengths “h Ben ;
Jerry have an established and recognized brand name. “h They have a
relaxed, loyal and casual workforce. “h Good public and social image
due to their principles in social awareness. “h Wide variety of
flavors in ice cream for customers. Weaknesses “h Ben ; Jerry have a
limited target market, as their product is niche. “h The suppliers and
distributors (such as Dreyers) have high bargaining power, which
allows them to raise their prices when they like. “h They have
concentrated more on donating their money to charities therefore
neglecting forthcoming changes in trends. “h Declining market share.

“h Slow development of new products. Opportunities “h Ben ; Jerry
should seek to globalize their product to compete effectively. “h
Change their current suppliers and distributors, which might enable
them to be more cost effective Threats “h Threat of substitutes “h
Economical changes such as in inflation or consumer spending “h Social
changes within the consumer market such as health conscience
attitudes. This report concludes that Ben ; Jerry has the potential to
prosper so long as they: “h To be prepared for forthcoming changes in
consumer needs and wants “h To compromise between maintaining their
company image and satisfying their investors needs. “h Try to reduce
their supplier and distribution costs by considering other options.

Recommendations This report has identified three main areas of concern
that need to be addressed; “h Overcoming Inertia “h Introducing an
international joint venture “h Maximizing profits through cost
efficiency (Economies of Scale) In todays global environment, change
rather than stability is necessary. Rapid changes in technology,
competition and customers demands have increased the rate at which
companies such as Ben ; Jerry’s needed to alter their strategies and
structures to survive in the market place. As discussed earlier, one
of the reasons why B&J have lost market share is because they failed
to change themselves and adapt to a new competitive environment
because of organisational inertia. To overcome this Ben & Jerry need
to identify the main barrier to change such as consumer tastes. This
can be overcome through the development of a marketing plan, as there
seems to be no real evidence that Ben & Jerry have done this. Ben &
Jerry’s reliance on cause generated marketing has its benefit but it
also has its pitfalls. Cause generated marketing and/or strategy has
adaptability, whereas the long-term marketing plan has focus.

Therefore a good marketing plan is adaptable. Employee productivity is
one of the key determinants of a company’s efficiency and cost
structure so this needs to be improved upon in order to make the
company more competitive. The culture of the organization is strongly
influenced by the founders and changes will be hard to achieve. It is
not recommended that the culture of the company be changed but that
devising new ways to increase employee productivity through the Human
Resource Function enhances it. After looking at many different options
it is suggested that the employees be put into self-managing teams.

Each team will be responsible for an entire task and time deadlines
should be given. It is also suggested that pay rewards should be given
to the teams that complete their task to the highest standard. This
option could lead to a more flexible work force, as employees will get
to know each other’s roles. It can also create a flatter
organizational hierarchy, which would make the decision making process
a lot quicker even though all employees are still involved. Marketing
should make the consumer believe that at a given time, be it on a date
or after a meal, that B;J is the perfect conclusion to a perfect lunch
or a perfect evening. B;J needs to be aware of group decision
especially couples. The idea of marketing B;J as the perfect
accompaniment to a date could be profitable. How about the most
romantic couple in USA competition? ———————————–
————————————- **Bibliography** See Report
Ben and Jerry’s Swat Analysis
Introduction: Ben & Jerry’s was founded in 1978 in a renovated gas
station in Burlington, Vermont, by childhood friends Ben Cohen and
Jerry Greenfield, with a $12,000.00 investment with only $4,000.00 of
which was borrowed. They became popular for their innovative flavors,
made from fresh Vermont milk and cream.

The company currently distributes ice cream, low fat ice cream, frozen
yogurt, sorbet and novelty products nationwide as well as in selected
foreign countries in supermarkets, grocery stores, convenience stores,
franchised Ben & Jerry’s scoop shops, restaurants and other venues.

Ben & Jerry’s Homemade, Inc. are dedicated to the creation and
demonstration of new corporate concept of liked prosperity.

Their mission statement consists of three interrelated parts: product,
economic and social. Underlying the mission is the determination to
seek new and creative ways of addressing all three parts, while
holding a deep respect for individual inside and outside the company,
and for the communities of which they are a part. Product: To make,
distribute and sell the finest quality all natural ice cream and
related products in a wide variety of innovative flavors made from
Vermont dairy products. Economic: To operate the company on a sound
financial basis of profitable growth, increasing value for the
shareholders, and creating career opportunities and financial rewards
for the employees. Social: To operate the company in a way that
actively recognizes the central role that business plays in the
structure of society by initiating innovative ways to improve the
quality of life of a broad community – local, national, and

Ben and Jerry’s is on the way to bringing euphoric ice cream to new
areas around the world. The first licensed scoop shop was in Israel
and now the latest are in Europe. They crossed their first borders
into Canada and Israel in 1988. The Canadian market was slowly
growing, but the licensee agreement in Israel has grown from the
original factory and scoop shop to 14 scoop shops and nationwide pint
distribution. Ben and Jerry’s set up an international department and
started to explore the world’s promising markets. The workteam at Ben
and Jerry’s have overtime developed varied types of general “teamwork”
concepts and team specific structures unique to specific department
needs. At any one time there can be a variety of interdepartmental
teams working on specific long-term or short-term projects. In
general, there is no company wide policy, standard or definition for
what a work team should look like or how it should function.

The public is being made more and more aware of the need for a lower
fat diet. One would think that this would be a negative for the ice
cream industry. Ben & Jerry’s, along with all of their competitors,
has recently been forced to develop new lines of ice cream. Ben &
Jerry’s is taking these new lines, like Low-Fat Ice Cream, No-Fat Ice
Cream, Low-Fat Frozen Yogurt, and No-Fat Frozen Yogurt, as a
challenge. They are trying to come up with the most original flavors,
while trying to maintain the quality, richness, and taste that have
made them successful. Ben & Jerry’s also takes great care to use milk
and cream that come from cows not treated with rBGH, an artificial
growth hormone.

Ben & Jerry’s is gradually switching over their containers from the
traditional cardboard to the ECO-Pint, an environmentally friendly,
unbleached paperboard. They are beginning with their #1 selling
flavor, World’s Best Vanilla. The unbleached packaging material had
to meet environmental, commercial, and FDA requirements. A global
search was launched to find a material that would bend properly to the
rounded shape, as well as, withstand the transporting process and
temperatures. The material decided on for the ECO-Pint is an
unbleached, brown (kraft) paperboard with an external clay coating to
allow the label to be printed. (Press Release, 1999)
Competitive Forces Barriers to entry Ben & Jerry’s is actually
providing a barrier to entry thanks to its recent buyout by Unilever.

This acquisition, along with Haagen-Dazs takeover by Nestle, has come
close to forming an oligopoly among ice cream distributors and
manufacturers. This formation of superpowers will deter any upstart
company from entering the industry based on the leverage held by the
big two. Intensity of Rivalry Two long-time rivals, Ben & Jerry’s and
Haagen-Dazs, look to be intensifying their rivalry. Unilever, the
world’s leading ice cream marketer, has recently acquired Ben &
Jerry’s. Unilever’s brand line previously consisted of Breyer’s, Good
Humor, Popsicle, and Klondike. Unilever was pushed into purchasing Ben
& Jerry’s based on Nestle, the number two ice cream marketer in the
world, and Haagen-Dazs’ recent joint venture, Ice Cream Partners.

Unilever’s purchase of Ben & Jerry’s led their partnership to turn
into Nestle’s acquisition of Haagen-Dazs. (Reporter, 2001) Threat of
Substitutes Crain’s Chicago Business reports that the McDonald’s
Corporation is planning to test new restaurant concepts, one of which
is an ice cream shop. This could put quite a strain on Ben & Jerry’s.

Indirect competition from one of the world’s largest and most
recognizable restaurants would be a major struggle. (Reporter, 2001)
Bargaining Power of Buyers Ben & Jerry’s has recently redesigned their
distribution. The redesign will create more company control over sales
and more efficiency in distribution of its products. Through the new
procedures, Ben & Jerry’s “increases sales calls by its own sales
force to all grocery stores…and establishes a network where no
distributor of Ben ; Jerry’s products will have a majority percentage
of the company’s distribution.”(Press Release, 1998) Bargaining Power
of Suppliers Suppliers will have a reduced bargaining power, thanks to
Ben & Jerry’s acquisition by Unilever. If suppliers are unwilling to
sell at a price Ben & Jerry’s is willing to pay, Ben & Jerry’s now has
greater resources to reach a greater number of possible suppliers than
ever before. Suppliers Ben and Jerry’s launched the Supplier Diversity
Program, which focuses on identifying minority- and women-owned
suppliers. Although this project is still in its fledgling stages,
some significant advancements have been made. Additionally, we have
improved their efforts to recruit minority consultants. Ben and
Jerry’s is constantly working to purchase ingredients from
environmentally and socially responsible sources: rBGH-FREE- Ben and
Jerry’s has opposed rBGH since the FDA approved it in 1994. The
company believes this artificial bovine growth hormone is detrimental
to the health of cows, threatens family farms by increasing the milk
supply, and has unknown long-term human health effects. St. Albans
Cooperative Creamery does not use rBGH in the dairy. Vanilla- In
conjunction with their vanilla supplier the Virginia Dare company,
they use a blended vanilla extract that contains vanilla beans from
the Savegre River region of Costa Rica. Our supplier purchases about
10,000 pounds of vanilla beans annually- all that this organization is
capable of producing in a year. One result of this relationship is
that over 3,000 acres of Costa Rican rainforest have been reforested
or reclaimed for sustainable production. Organics- Ben and Jerry’s use
organic cotton for its line of T-shirts sold in company stores and
franchised scoop shops. They entered into a business arrangement with
Pataginia for organic T-shirts and other apparel. Since it is not a
food crop, cotton production is not regulated by the FDA and is bottle
pesticide and fertilizer intensive. In 1997, Ben and Jerry’s examined
the feasibility of totally organic line of ice cream products. After
serious and multi-functional considerations on the issue, the company
concluded that cost and consumer expectations were barriers to
pursuing an organic line at that time. Distribution Ben and Jerry’s
has redesigned its distribution network, creation more company control
over sales and more efficiency in distribution of its products. Under
new arrangement, Ben and Jerry’s increased it direct sales calls by
its own sales force to all grocery and chain convenience stores and
established a network where no distributor of Ben and Jerry’s products
will have a majority percentage of the company’s distribution. The
distribution arrangement puts Ben and Jerry’s in a better position to
control their product sales and implement more efficient domestic
distribution. Basically, Ben and Jerry sells it and the distributors
deliver it. Prior to this arrangement, Dreyer’s Grand Ice Cream
distributes significantly more than a majority of sales of Ben and
Jerry’s products and participated in a large percentage of the retail
sales calls. Under the new arrangement, Ben and Jerry’s will be
responsible for a greater percentage of direct retail selling efforts
with distribution being handled by a larger number of distributors.

Under the distribution network redesign, Haagen-Dazs will distribute
Ben and Jerry’s products to specified territories; the balance of
domestic deliveries will be handled by other independent distributors;
a number of whom already have distribution agreements with Ben and
Jerry’s for specified territories. In other territories Ben and
Jerry’s intends, during the termination notice period under the
previous Dryer’s agreement, to conclude distribution arrangements with
additional independent distributors. Ben and Jerry’s produces super
premium ice cream, ice cream novelties, low-fat ice cream, low-fat and
non-fat frozen yogurt, and sorbet using Vermont dairy products,
Vermont spring water, and high quality natural ingredients. Ben and
Jerry’s products are distributed nationwide and in selected foreign
countries in supermarkets, grocery stores, convenience stores,
restaurants and other venues. Competition Ben and Jerry’s competition
are Haagen-Dazs, Dreyer’s Breyer’s, Blue Bell, Healthy Choice, and
Wells Bluebunny. Although Ben and Jerry’s fiercest competition are
Dreyer’s and Haagen-Dazs. Grocery stores hold a big segment of sales
with Ben and Jerry’s. In Dreyer’s first seven weeks in stores, it
garnered $125,656 in sales, compared to Ben and Jerry’s $311,289, and
Haagen-Dazs’ $286,481. Those numbers reflect sales ate 368
supermarkets in Houston, including Randalls, Albertson’s, Kroger, HEB
Pantry foods, Rice Epicurean, Fiesta Markets and various independent.

At the time of these findings, Dreyer’s had 58 percent distribution,
compared to Ben and Jerry’s 86 percent distribution and Haagen-Dazs’
84 percent. Ben and Jerry’s which has about 34 flavors, including it
famous Chunky Monkey and Cherry Garcia has, for the most part, out-
chunked the competition. Ben and Jerry’s also saw an 85 percent
increase in its UK sales in 1998, putting it on equal footing with it
rival Haagen-Dazs. Their plans are to match Haagen-Dazs in terms of
national distribution in the UK, and will spend about 800,000 Pounds
on a marketing campaign in support of the national introduction of its
product. Ben and Jerry’s has been playing catch-up since it entered
the UK market in 1994, a good four years after Haagen-Dazs. The
latter’s entry into the United Kingdom was a turning point for the ice
cream industry on the continent and in the UK. I created a demand
among consumers for higher quality products and a rush by local
marketers to upgrade their offerings to meet the demand and keep their
customers from turning to the new products foe the American invader.

Ben and Jerry’s benefits from the consumer awareness of super premium
quality generated by Haagen-Dazs, but it has also faced a competitive
situation that is more intense because, European ice cream marketers
have improve their product offerings in response to Ben and Jerry’s
and Haagen-Dazs’ entry. Customers Almost everybody eats ice cream. Ben
and Jerry’s specialize in super premium ice cream. The quality of
super premium comes at a price. The ice cream industry likes to
fulfill customer’s desire for indulgence-and their ability to spend
freely. In common terms, people are indulging in ice cream. Consumers
are willing to pay more, although higher-end private label offerings
also are on the rise and are somewhat mitigating the higher cost of
super premium. Also consumers aren’t really concerned a the fatting
aspect of ice cream. Consumers want ice cream that tastes good. They
realize full-fat ice cream tastes better that health-claimed ice
cream. Consumers follow many healthy diets, but when it comes to ice
cream, they like to reward themselves with the best, and full-fat ice
cream is certainly the best. There has been a return in indulgence.

Restaurants have doubled dessert menus, and people are looking for
rich and flavorful treats to reward themselves for working out in the
gym and working long hard hours.

“…And a look at the year ahead.” Ice Cream Reporter. January 20,
2001. Vol. 14, No. 2; Pg. 1. http://web.lexis- “Ben ; Jerry’s Announces Distribution
Redesign.” Press Release. August 31, 1998. “Ben & Jerry’s
Announces Environmentally-Friendly Packaging Innovation.” Press
Release. February 22, 1999. “Frozen Dessert Year
in Review.” Ice Cream Reporter. January 20, 2001. Vol. 14, No. 2; Pg.