Ben and Jerrys Homemade Ice Cream Inc.

: A period of
Transition

Introduction to the Company

Formed by friends Ben Cohen and Jerry Greenfield
Situated in Vermont and more consistent with the counterculture
values
Founders took a correspondence
Company famous for its commitment to social causes and collective
management
2nd highest market share of 42%
Major competitor was Haagen Daz

Industry analysis

Ice cream industry was worth $10.5 billion

Superpremium and premiuim ice creams dominated
98% households ate ice cream
Adults consumed ice cream as an indulgence or guilty pleasure and
gave it to children as rewards
Super market ice cream inventory turned 35 times year
Market was segmented into categories according to butterfat content
The industry was fragmented into local and regional companies along
with a number of growing multi nationals

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Ice cream making process

Pasteurizing Homogeniz i
Freezing Aerating Mixing Fil ing Hardening
ng
Supepremium Ice cream market
Distinguished from other ice creams by higher fat content and lower
level of overrun
Tasted much creamier and richer than traditional ice creams
Competition in the segment focused on quality over price
Once consumer invested in a superpremium brand they usually didnt
switch due to any differential price
Market was segmented into two sub segments : smooth flavors and
mix in flavors
Haagen daz was market leader in smooth segment while B&J was
leader in mix in

Direct store delivery

Distribution in this market was usually direct store delivery
In this the ice cream was delvered to stores and actually placed on the
shelf by a distributor rep.
Distribution costs were and important competitive factor

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FDA requirements
In the 1990s low fat desserts became extremely popular
FDA reinforced this trend
Mandated a new food labeling standard
Market fragmented into hundereds of flavors and graduations to cater
to this trend
Competetion in ice cream industry grew intense
Consumers became more value conscious
The superpremium segment slowed down whereas the premium
segment growth escalated
By 1994 the industry had spent just $25 million in advertising

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Competitors

Oldest and largest Calfornia based

MS of approx 50% Extensive distribution Network
Outside distributors Manufacturing other firms
Smooth and creamy products
Liquer flavored and sorbets Nestle acquisition

Haage
's
n Dazs
Dreyer

Breyer
Jerry's
's Purchased by unilever
Ben &
Mix-in
Unconventional flavors Threat: less expensive
Iconic brand and logo Offer to purchase HD

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Ben & Jerrys

Flavor differentiation was the key factor of growth

Mix in flavors were specialty
Frozen yogurt also on top in sales
As the business grew system inefficiencies became apparent
Dairy products shipped from Vermont to Dreyers plant
2 factories, one in Springfield and the other in Waterbury
Another 3rd plant in St.Albans was planned but couldnt follow through
Less preservatives and more flavoring added
Difficulty in forecasting leading to shortage or overstocking

Issue at hand
1. The superpremium market was declining
2. Ben Holland had to expand the company to new horizon while
upholding the brands core identity

Porters Five Forces Model

1. Rivalry among Competing Sellers:- The principal competitors in the
super-premium ice cream industry are large, diversified companies
with significantly greater resources than Ben & Jerrys; the primary
competitors include Dreyers and Haagen-Dazs. Rivalry can be
characterized as intense, given that numerous competitors exist, the
cost of switching to rival brands is low, and the sales-increasing tactics
employed by Dreyers and other rivals threatens to boosts rivals unit
volume of production B
2. Buyers: - The power of buyers is relatively high because buyers are
large, consisting of individual customers, grocery stores, convenience
stores, and restaurants nationwide and globally. Since retailers
purchase ice cream products in large quantities, this gives buyers
substantial leverage over price. In addition, there are many ice cream
products to choose from, so the buyers cost of switching to competing

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 brands is relatively low. In order to defend against this competitive
force, a companys strategy must include strong product differentiation
so that buyers are less able to switch over without incurring large
costs.
3. Suppliers:- The suppliers to the ice cream industry include dairy
farmers, paper container manufacturers, and suppliers of various
flavourings. Such suppliers are a moderate competitive force, given
that the ice cream industry they are supplying is a major customer,
there are multiple suppliers throughout the nation to choose from, and
many of the suppliers viability is tied to the well-being of large,
established companies such as Dreyers and Haagen-Dazs. Therefore,
the ice cream suppliers have moderate leverage to bargain over price.
4. Substitute Products:- Many substitutes products are available within
the dessert and frozen food industry (cookies, pies, Popsicles, cake).
The ease with which buyers can switch to substitute products is an
indicator of the strength of this competitive force. Since substitute
products are readily available and attractively priced compared to the
relatively higher priced super-premium ice cream products, the
competitive pressures posed by substitute products are intense.
Companies that enter the super-premium market, therefore, must
adopt defensive strategies that convince buyers their higher priced
product has better features (i.e., quality, taste, innovative flavours)
that more than make up for the difference in price.
5. Potential New Entrants:- The barriers to entry within the ice cream
industry are moderate due to the brand preferences and customer
loyalty toward the larger and more established rival companies. Other
obstacles to new entrants include strong brand loyalty to established
firms and economic factors, such as the requirement for large sources
of capital, specialized mixing facilities and manufacturing plants. In
addition, the accessibility of distribution channels can be difficult for an
unknown firm with little or no brand recognition.

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Solutions
Advertising: they should spend more on advertising to get ahead of
Haagen Dazs
Relationship building: Build relationship with retailers and distributors
to get shelf space
Governance: the company needs new blood and investors to build
another plant
Must adopt defensive strategies that convince buyers their higher
priced product has better features (i.e., quality, taste, innovative
flavours) that more than make up for the difference in price.

Conclusion
Ben & Jerrys ice cream needs a visionary CEO that can make sure this
company emerges as the market leader with growth strategies that can think
out of the box. The owners recognize the need to relinquish control and that
is exactly how it should be so that the company ventures into new
geographical areas and grow as a corporate entity rather than a casual
business which is something that Ben & Jerrys no longer is.

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 Business Policy
Dr.Zahid Riaz

Ben & Jerrys Ice Cream Inc.

Case Analysis

Submitted by:
Mehreen Ashraf
MBA 2-section B