The main issue Ben and Jerry faced was they simply did not expect their business to grow to such massive proportions in a short period. The growth demanded tremendous attention from the company’s owners and over a period, this started to take a toll on them. Though Ben and Jerry tried their best to manage, they did not have contingency plans, foresight and action to handle the growth.
Moreover, with increase in market competition & pressure from investors due to loss they realized the company needed someone with market knowledge, organizational, operational and management experience to lead the company. Bob Holland, a graduate with a stellar profile was hired in these circumstances to lead the company. So what could Bob do to uplift the company? Below are some hypothetical suggestions.
The first thing Bob can focus on is the market. It is clear that the market was fragmented with no unifying force. Many regions had a host of local and regional companies. Having captured the ‘Mix in’ flavor market, Ben and Jerry had to make sure that they did not compromise the first mover advantage. This can be done by introducing new flavors after taking into consideration public’s choices by experimenting with taste tests. This will cater to everyone’s taste buds and increase sales.
The case clearly states that ice cream sales in supermarkets were five times more profitable per square feet compared to other goods. We have already learnt in strategy class how the cola companies made the best use of supermarket aisles to promote sales. A similar strategy can be tested. Ben and Jerry could buy refrigeration space and place these in strategic locations in supermarkets to improve sales.
Looking at exhibits in the case study, we observe that United States market was already saturated. With population and income growth booming in Latin America and Asia, introducing products in emerging markets will definitely bear long-term fruits for the company. Once established strong entry barriers can be created by introducing discounts and low priced goods, which will favor the incumbent. Specializing in product categories provides cost advantage when it comes to raw materials. This will beat down smaller firms or other players trying to enter the market with limited capital.
Other factors that affected Ben and Jerry were their poor distribution networks, lack of advertising and R&D expenditure. To improve these they could take a cue from their competitor Haagen Dazs.
Haagen Dazs clearly controlled much of their distribution network and spent resources on inventing new flavors and improving production process. The ice cream production was complicated and took 6 hours. Investing in the process to reduce production time will greatly benefit the company. Last but not the least in order to survive in global markets advertising is necessary. It keeps people informed about products, increases market share and creates brand value. If these actions are implemented Ben and Jerry’s ice cream may well be in the path of growth.