Ben

1
Ben Jerrys Homemade Inc.

• Presented by
• Jared Young
• August 2002

2
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

3
Session overview

• Background
• Major issue
• Situation analysis
• Identification and evaluation of alternatives
• Recommended strategy
• Implementation plan
• Conclusion

4
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

5
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

6
Product range
Super premium ice cream (also in low fat)
Premium ice cream (super-market range)
Frozen yoghurt
Conscious Concoctions (specialty ice cream)
Novelty items

• Gifts

Sorbet

• Over 50 innovative flavours (and names)
• Mostly pint size and bulk containers
• Environmentally friendly packaging

7
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

8
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

9
Current channel structure
Wholesalers
Mail order internet
International Licenses
Company stores
Franchisees
Supermarkets Convenience stores
10
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

11
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?

12
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

13
Independent Merchant Wholesalers

• Independent regional ice cream distributors
• Dreyers Grand Ice Cream (exclusive agreement)
• Ben Jerrys of New York
• Edys Grand Ice Cream distributors
• Some sub-distributors

14
Advantages and disadvantages of using independent
wholesalers

• Advantages
• specialists
• efficient
• existing facilities
• market coverage
• sales networks
• market information
• small order processing
• Others?

• Disadvantages
• less control over logistics and image related
  factors
• may have competing interests
• potential for conflict
• Others?

15
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?

16
Company strategic analysis

• Internal analysis
• External analysis
• Competitor and
• Market analysis

17
Relevant strengths

• Gourmet quality, natural ice cream
• Good corporate citizen
• Loyal customers
• Positive media attention
• Underdog that represents everymans interests
• Innovative
• Good relationship with distributors
• Key to growth
• Other Strengths?

18
Strengths Matrix
19
Relevant weaknesses

• 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?

20
Weakness Matrix
21
Relevant Opportunities

• 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?

22
Opportunity Matrix
23
Relevant Threats

• 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?

24
Threats Matrix
25
Competitor analysis

• 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

26
Market analysis

• 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

27
Strategies for growth

• Ansoffs growth option matrix

Existing Products New Products Existing
Markets Market Penetration Product Development
New Markets Market Development Product
Diversification
28
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?
29
Identification of alternatives

• 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?

30
Evaluation criteria

• Minimise channel conflict
• Be socially responsible
• Cost effectiveness
• Control product quality
• Sustain competitive advantages
• Maximise flexibility for sales growth
• Customer loyalty

31
Should we use any other criteria for evaluating
alternatives?Which are the least important?
32
A scoring model is used to evaluate alternative
strategies on each of the criteria
33
Possible scoring model for alternatives
34
Recommended short-medium term strategy
Alternative A

• 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

35
Implementation plan

• What needs to be done?
• Who is responsible?
• When should the strategy be implemented?
• How will we measure success?

36
Conclusion

• 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