Ben & Jerry’s Marketing Audit Essay

1 Executive Summary According to the American Marketing Association, â€Å"marketing is an organizational function and a set of process for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders† (Kerin, 2005, p.6). I have completed a marketing audit of Ben & Jerry’s Homemade, Inc. in the following categories: Market and Distribution Channels, Manufacturing, Markets and Customers, Competition, Marketing, Objectives, Strategies and Tactics, the 4P’s (product, pricing, promotion, and place), and sales. Based on my findings, there are several factors that will play a key role in Ben & Jerry’s Ice Cream becoming number one in the ice cream industry, instead of being ranked, as number 2. They are as follows: Streamlining the variety and names of the ice cream flavors Increase sales in the non target markets Sell premium ice cream in half gallon sizes Improve brand image Ben & Jerry’s ice cream currently offers consumers Super-premium ice cream flavors that are both unique and quirky. Furthermore, some of the wackiest flavors were suggested by adults. For example, some of the flavors include, Cherry Garcia, Chunky Monkey, and Chubby Hubby (www.benjerry.com). As a result of some of the outlandish names, it becomes difficult for consumers have to figure out why an ice cream would be called chunky monkey, and secondly, what does the flavor consist of. After all, Ben & Jerry’s target customers are at the high end of the consumer spending spectrum. Haagen-Daazs’ most popular ice cream flavor is simply, vanilla. Therefore, perception becomes a vital marketing concept to attain the number one  status. Although Ben & Jerry’s has been acquired by Unilever, one of the leading food companies in the world, Haagen Dazs, which has been acquired by Dreyer’s has still been able to penetrate 42% of the super-premium ice cream mark et, while Ben & Jerry’s penetrated 38%. However, Ben & Jerry’s have been able to have 100% profitability over the last nine years, while decreasing the cost of sales. Penetrating the 20% non-target market would allow revenue to continue to climb upward by becoming more visible. Advertising can be done through supermarket circulars, television commercials, and radio announcements, and offering the super-premium ice promotions such as buy one, get one free or coupons. Thus, customers and profit margins increase. Currently, Ben & Jerry’s super-premium ice cream is sold in pint size quantities. Gallon size quantities were only sold to warehouse club stores. Selling the product to the general public in gallon sizes would allow them to infiltrate the family segment of the ice cream industry. Understanding the consumer is a vital tool in successful marketing and sales. However, careful research and planning are necessary. Thus, a recommendation is being made for Ben & Jerry’s to enter the market of â€Å"micro-branding†; a trend that is becoming more successful in the ice cream industry. â€Å"Micro-branding would allow Ben & Jerry’s to partner with a compatible and recognized national brand to develop an ice cream formulation that delivers a taste experience that is related to the national brand’s product (www.qffintl.com). Some of the companies that currently co-brand are Cool Brands International/General Mills = Yoplait Frozen Breakfast Bars, Reese’s candies and Friendly’s Restaurants. Furthermore, prior to launching this new venture, Ben & Jerry’s can conduct a survey among loyal customers. Ben & Jerry’s Ice Cream is the best illustration of the 80/20 rule. They achieve 80% of the revenues in the target market and 20% in non target markets; however, to increase sales and become No.1, they will need to increase sales in non target markets while stimulating demand in target markets. Based on corporate information (www.benjerry.com), Ben & Jerry’s Ice Cream evolved when two childhood buddies, Ben Cohen and Jerry Greenfield met in a 1963 7th grade gym class in Merrick, New York. In 1977, Ben and Jerry move to Vermont and completed a $5 correspondence course in ice cream making. Afterward, a $12,000.00 investment was made, $4,000.00 of it borrowed, and they opened their first Ben and Jerry’s homemade ice cream scoop shop in a renovated gas station in Burlington, Vermont, on May 5, 1978. The company has maintained a reputation for producing gourmet ice cream and frozen treats, as well as promotions that foster an image as an independent socially conscious Vermont company. On August 3, 2000, Ben and Jerry’s were acquired by Unilever, a British-Dutch food company with distribution in 100 countries. This acquisition would allow the Ben & Jerry brand ice cream to cross over into national and international markets. The ice cream was made with fresh V ermont cream and milk, and the best and biggest chunks of nuts, fruits, candies, and cookies† (www.benjerry.com). Currently, Ben & Jerry’s sell 18 Mio gallons of ice cream per year, and more than â€Å"$200 Mio in annual sales worldwide including Europe, the Mideast, and Asia† (Kerin, 2006, p.2). This makes them one of the top maker’s of premium ice cream, matching  rivals Nestlà ©Ã¢â‚¬â„¢s Haagen-Dazs, and Godiva. Some of the first flavors included French Vanilla, Mint with Oreo Cookie, Maple Walnut, Butter Pecan, and Dastardly Mash. In order to maintain its status as a leader in the premium ice cream industry, new flavors are constantly being marketed, as well as measures to determine what the ice cream consumer wants now and in the future. The corporate vision is built around three strategic goals (missions) that support Ben & Jerry’s corporate concept of linked prosperity. These goals are: 1. The product mission: Become the leading distributor of freshly made quality ice cream, utilizing natural ingredients that do not violate the environment. 2. The economic mission: Achieve capital growth for the corporation, the stakeholders, and the employees. 3. The social mission: Be a pioneer in creating innovative business practices that make a positive impact on society nationally and internationally. 1.2 Market and Distribution Channels The company currently markets flavor ice cream, frozen yogurt and sorbet in packaged pints, for sale primarily through four channels: 1. Supermarkets, and other grocery stores 2. Convenience stores 3. Retail food outlets and in bulk primarily to restaurants. 4. Ben & Jerry’s company-owned franchised scoop shops. Ben & Jerry’s Ice Cream currently distribute their products throughout the United States primarily through independent distributors targeting certain markets including New England, New York, the Mid-Atlantic region, Florida, Texas, the West Coast and selected other major markets, including the Midwest and Denver areas. In 1999, approximately 77% of the sales of the Company’s packaged pints were attributed to these target markets (www.benjerry.com). Also, the ice cream products are also available in â€Å"non-target† markets in the United States, the United Kingdom, France, Israel, Canada, the Netherlands, Belgium, Japan, Singapore, Peru and Lebanon. 1.3 Manufacturing The company manufactures Ben & Jerry’s super premium ice cream and frozen yogurt pints at its plant in Vermont. This plant manufactures Ben & Jerry’s ice cream, frozen yogurt, frozen smoothies and sorbet in packaged pints,  12oz. and single serve containers at its St. Albans, Vermont plant. However, in 1999, the company shifted the manufacturing of its frozen novelty line of business from a company-owned plant in Springfield, Vermont, to third party co-packers to improve the company’s competitive position, gross margins and profitability. As a result of this restructuring, the company was able to write-off `assets associated with the ice cream novelty business, asset impairment charges of other manufacturing assets and costs associated with severance for those employees who do not accept the Company’s offer of relocation. The implementation of this manufacturing restructuring program resulted in a pre-tax special charge to earnings of approximately $8.6 Mio in the fourth quarter of 1999 that was primarily non-cash. The plan was executed in 2000. Thus, outsourcing its novelty business will enable the Company to introduce a wider range of novelty products in future periods. 1.4 Markets and Customers Ben & Jerry’s ice cream is packaged in pints, quarts,  ½ gallons, single serve containers and novelty products primarily through supermarkets, other grocery stores, convenience stores and other retail food outlets. The company markets ice cream, frozen yogurt and sorbet in 2  ½ gallon bulk containers primarily through franchised and company-owned Ben & Jerry’s scoop shops, through restaurants and food service accounts, such as stadiums, airports, cafeterias, and hotels. The ice cream is distributed through independent ice cream distributors; with some exceptions, only one distributor is appointed for each territory for supermarkets. In most areas, sub-distributors are used to distribute to the smaller classes of trade. Company trucks and other distributors distribute products that are sold in Vermont and upstate New York. In the late 90’s, Ben & Jerry’s redesigned its distribution network to enable more company control over sales and improve efficiency in the distribution of its products. Under the redesign, Ben & Jerry’s increased direct sales calls by its own sales force to all grocery and chain convenience stores and has a network where no distributor of Ben & Jerry’s products has a majority percentage of the Company’s distribution. In addition, a joint venture of the U.S. ice cream operations of Nestle and the Pillsbury Company distributes Ben & Jerry’s products in specified territories; the balance of domestic deliveries are distributed primarily by  Dreyer’s Grand Ice Cream. Under the redesign, no single distributor is expected to handle over 40% of Ben & Jerry’s distribution, as compared with Dreyer’s distribution activities accounting for approximately 57% of the company’s net sales in 1997 and 1998. 1.5 Competition â€Å"The ability to create innovative marketing strategies is crucial to a company’s competitiveness† (Magrath, Allan, 1992, p.1). Competition in the premium ice cream industry is fierce. Initially, Nestle, Dreyer’s, and Blue Bell were Ben & Jerry’s top three top competitors. In July of 2003, Nestle merged its operations with Dreyer’s, which makes Edy’s and Haagen-Dazs ice cream (www.dreamery.com). Other significant competitors are Columbo, Healthy Choice, and Starbucks, which are all distributed by Dreyer’s. According to research, Haagen- Dazs uses several approaches to keep the status of being number one in the ice cream industry, and they are as follows: a. Substantial visibility in more foreign markets than Ben & Jerry’s. b. More shares of the markets. c. Cookies and candies are used as a part of the ingredients. In addition to competing with the number one competitor, Dreyer/Nestle, Ben & Jerry’s also has to face competition from other players including: Berkeley Farms Blue Bell CoolBrands Dunkin Friendly Ice Cream Gifford’s Schwan’s (Competitor’s cont’d) Stewart’s Shops Stonyfield Farm YoCream 2 Marketing Ben and Jerry’s Ice-cream introduced themselves to the marketplace as unusual and comical, with the hopes of appealing to the ice cream lover’s sense of humor. Thus, allowing them to acquire a loyal following. However, many adult  consumers did not find their advertising funny, as a result market research revealed confusion. Although the packaging of the ice cream was amusing, patrons were often trying to figure out why a company, that wants to sell premium ice-cream, would come up with an ice cream flavor such as â€Å"Chunky Monkey† and â€Å"Chubby Hubby†. The playful packaging was viewed as being too juvenile to necessitate its luxury price. In 1998, the company re-launched its entire pint line. â€Å"The design of the ice cream packaging was changed to a more polished grown up design utilizing collages of illustrations, photography and textures. The polished grown up designs cleared the confusion, strengthened the brand, and matched the quality of the ice cream. A superb premium look accompanied the price, and was created without forfeiting the trademark Ben & Jerry’s eccentricity† (www.fitch.com). Changing the packaging design helped the company to be taken more serious by the premium ice cream consumer market. To sustain their brand and marketing strategy, Ben & Jerry make sure all marketing activities are aimed at building brand equity, a solid reputation for the company, and most importantly, profitable customer relationship. The company’s marketing strategy includes: 1. Emphasizing the high quality, natural ingredients in its products. 2. Highlighting commitment to social change through innovative promotional and advertising campaigns facilitating brand awareness through Public Relations, magazines, radio, TV coverage, and the internet. The company now distributes its ice cream products internationally in the United Kingdom, Israel, certain parts of Japan, Ireland, France, Canada, the Netherlands, Belgium, Singapore, Peru, and Lebanon. Furthermore, all of the scoop shops are franchised, which contributes significantly to the growth of the brand. 2.1 Objectives, Strategies and Tactics Competition in the premium ice cream industry is fierce. The company’s two principal competitor’s are the Haagen-Dazs operation of Ice Cream Partners and Dreyer’s/Edys, which introduced Dreamery. Other significant frozen dessert competitors are Columbo, Healthy Choice and Starbucks. â€Å"Haagen-Dazs is the industry leader with 42% of the super-premium business, and No.2 Ben & Jerry’s, with 38 percent† (Emert, Carol, San Francisco Chronicle,p.1)  however Ben and Jerry are looking at becoming No 1 and the 4Ps analysis below illustrate how they want to achieve that goal. 2.2 4P’s – Product The packaged ice cream industry includes economy, regular, premium, premium plus and super premium products. Super premium ice cream is generally characterized by a greater richness and density than other kinds of ice cream. This higher quality ice cream generally costs more than other kinds and is usually marketed by emphasizing quality, flavor selection, texture and brand image. Other types of ice cream are largely marketed on the basis of price (www.benjerry.com). Ben & Jerry’s Homemade makes its products at facilities in Vermont. They make over 40 different Super-premium Ice Cream flavors (www.hoovers.com) Super-premium Flavors: Brownie Batter Butter Pecan Cherry Garcia Chocolate Chip Cookie Dough Chocolate Fudge Brownie Chocolate Therapy Chubby Hubby Chunky Monkey Coffee Coffee Heath Bar Crunch Dave Matthews Brand Magic Brownies Dublin Mudslide Everything But The†¦ Fudge Central Fossil Fuel Half Baked In A Crunch Karamel Sutra Martha Martha Marshmallow Mint Chocolate Cookie New York Super Fudge Chunk Peanut Butter Me Up Phish Food Uncanny Cashew Wich Frozen Yogurt Cherry Garcia (low-fat) Chocolate Fudge Brownie Half Baked Phish Food Super Premium Ice Cream, Super Premium Frozen Yogurt, and more recently, Super Premium Sorbet have become an important part of the frozen dessert industry reaching â€Å"$3.5 billion in annual ice cream sales (Emert, Carol, p.1) Super premium ice cream is the fastest growing segment in the ice cream industry. Sales in the low-card ice cream market skyrocketed to close to $76 Mio in January of 2005. Research shows, â€Å"66% of carbohydrate conscious consumers are seeking low fat products† (www.qffintl.com). In response to the demand for lower fat and lower cholesterol products, Ben & Jerry’s introduced its own super premium low fat frozen yogurt and lactose-free and cholesterol-free sorbet, as well as a new line of low fat ice cream. 2.3 Pricing Based on information provided by Information Resources, Inc., a software and marketing information services company, the total annual U.S. sales in supermarkets at retail prices of super premium and premium plus ice cream, frozen yogurt and sorbet were approximately $572 Mio in 1999 compared with about $518 Mio in 1998. During the 2001-2003 period sales grew by 11.6% In 2004, sales were approximately $260 Mio, and 2004 sales were $272 Mio. Ben and Jerry’s product is considered an affordable luxury because of the high quality and quantity of the ingredients. However, individual retailers set their own retail pricing. A reflection of the variation of pricing depends on local market conditions, as illustrated in the table below. Retail/Grocery Store Convenience store Pathmark Shoprite WaWa CVS Ben & Jerry $3.89 $3.79 $3.99 $3.69 Dreyer/Haagen-Dazs $4.19 $3.99 $4.29 $3.89 2.4 Place Competition and consumer demand are increasing in the premium ice cream industry. Because of limited shelf space within supermarkets, visibility becomes minimal for many ice cream manufacturers. As a result, some brands have been forced out of some markets. In most supermarkets that were visited, Ben & Jerry’s have their own section of shelf space to advertise there product. This is done by having their product advertised in a separate freezer space. In markets where they do not have their own shelf space, they tend to use a seasonal adjustment strategy. 2.5 Promotion Ben & Jerry’s use community involvement to advertise their ice cream. The company hosts a yearly folk festival which has about 50,000+ attendees. Free cones are given away at this annual event. In addition, the company has guided tours of its facility in Vermont. This is a non-traditional marketing approach. Currently, the company does not advertise in retail papers, nor do  they solicit buyers in television ads. As a result, it is difficult to quantify investment and return on investment (ROI). However, being able to double profit within five years illustrates Ben & Jerry’s ability to successfully market and drive sales. 2.6 Sales Cohen and Greenfield began packing the ice cream in pints for sale in local grocery stores in 1980. The first franchise followed in 1981. The company earned national exposure that year when Time magazine hailed their product as â€Å"the best ice cream in the world.† After opening its first out-of-state franchise in Maine in 1983, Ben & Jerry’s Homemade first went public in a Vermont-only stock offering (to keep ownership local) in 1984. Sales that year surpassed $4 Mio. The fat-free mania of the 1990s prompted the ice-cream producer to introduce frozen yogurt nationally in 1992 and nonfat frozen yogurt in 1995. Stiff competition and plant expansion in 1994 caused Ben & Jerry’s to suffer its first-ever loss. In 2000, Unilever acquired the company for about $326 Mio. Since its purchase of Ben & Jerry’s, Unilever has not fully integrated the company into its freezer-full of North American ice cream brands. However the parent has plans to boost the brand into its global portfolio. While most Ben & Jerry’s is exported from Vermont, limited production of the product has begun in Europe. Since its purchase of Ben & Jerry’s, Unilever has not fully integrated the company into its freezer-full of North American ice cream brands. However the parent has plans to boost the brand into its global portfolio. While most Ben & Jerry’s is exported from Vermont, limited production of the product has begun in Europe. After a slow spell in its retail growth, Ben & Jerry’s has announced it will step up store openings around the US. To share the cost of nabbing prime retail locations, the company is partnering with its Vermont neighbor Green Mountain Coffee Roasters to add coffee and pastries to its SCOOP SHOP menu — and hopefully extend sales into times of the day when people aren’t typically eating ice cream. An analysis of net sales for the last 9 years reflects a significant growth that is a result of: A better market penetration.  A reduction of cost of sales throughout the years (operational efficiency, improved sales and marketing) Improved gross profit over the years (reflects increased efficiency) In fact, based on the above analysis, Ben & Jerry’s are in a position to beat out their number one competitors, Dreyer’s and Nestle. 3 Recommendations Based on the findings in conducting a Marketing Audit for Ben & Jerry’s Super-Premium Ice Cream, Ben & Jerry’s Ice Cream is the best example of how to turn a dream into a successful business venture. In fact, they have achieved the No.2 player in the Super- Premium Ice Cream market. Their next goal is to become No.1. To achieve their goal, Ben & Jerry’s have to address the following issues that were identified in the Marketing Audit: They have to stream – line the variety of flavors. In fact, the current offering tends to confuse the consumer especially given the associated luxury price tag. They have to increase sales in the non target markets by increased marketing as an effort to become more visible to consumers. Sample marketing and advertising channels include television commercials, supermarket circulars, and radio advertisements. In fact, Ben & Jerry’s Ice Cream is the best illustration of the 80/20 rule. They achieve 80% of the revenues in the target market and 20% in non target markets; however, to increase sales and become No.1, they will need to increase sales in non target markets while stimulating demand in target markets. References Anonymous. Ben & Jerry’s 10-405K Report. Retrieved December 28, 2005, from http://www.benjerry.com/our company/research library/fin/1999/10k.html. Anonymous. Ben & Jerry’s 10-405K Report. Retreived December 28, 2005, from http://www.benjerry.com/our company/press_center/press/press_release.cfm. Anonymous. Packaging, Brand Communications and Consumer Environment. Retrieved from http://www.fitvh.com/case-study Anonymous. (2005).USA summer ice cream scene: Novelties, Co-Branding and Something for Everyone. Retrieved December 28, 2005 from http://www/qffintl.com/pdf/july_2005/95.cfm Chevron, J, (1998). The Delphi Process: Strategic Branding Methodology, (15)3, 1-2. Retrieved December 28, 2005 from http://www.jrcanda.com?art_delphi.html Emert, Carol. (1999). Dreyer’s enters the cold war. New Dreamery line is going cone to cone with Haagen–Dazs and Ben & Jerry’s. Retrieved January 10, 2006, from http://www/sfgate.com/cgi-bin/article.cgi Kerin, Roger, Hartley, Steven.(2005) Marketing. Eighth, Retrieved December 5, 2005 from University of Phoenix database Magrath, A. (1992). Six pathways to marketing innovation. Business & Company. Resource Center. Retrieved December 10, 2005 from http://galenet.galegroup.com Murray, B. Ben & Jerry’s homemade inc. Hoovers A D&B Company. Retrieved December 12, 2005, from http://www.hoovers.com