Wednesday, April 20, 2016

Ben & Jerry's Strategy

Ben & Jerry’s Strategy going forward? (And current news: the co-founders social mission remains, as Ben & Jerry arrested at Capitol.

With declining sales due to increasing sales of lower fat desserts, declining gross profit margins due to Ben & Jerry’s doubling of products produced, entry into smooth no-chunk super-premium sub-segment (which failed to surpass the Haagen-Dazs product), premium ice cream makers Breyer’s (Unilever) rumored to be seeking a super-premium brand to acquire, and Dreyer’s (Nestle) planning to increase advertising for premium ice cream, what should Ben & Jerry’s strategy be in 1995 for the future?

Considering “Bringing Science to The Art of Strategy”, what are Ben & Jerry’s choices for strategy?
Looking at choices while keeping in mind their issues above and their product mission of “making, distributing, and selling the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products”, possible choices are:

Change their super-premium formula in terms of quality standards (Vermont ingredients), high percentage of flavoring content, and mix-in ice cream concept.

Or, retain the Vermont heritage as the iconic brand recognition, for example keep the Vermont dairy ingredients, however make refinements to their current product line (number of products, flavors, sub-segment of smooth-no chunk).

With these two choices, what are strategic possibilities?

Changing their super-premium formula, would in effect be aligning their products with Haagen-Dazs (their main competitor), and eliminating differentiation.

Retaining the Vermont heritage choice, would continue their original product mission while seeking manufacturing and distribution efficiencies to reverse the decline of gross profit margins.

What are the conditions for success of each of the above possibilities?

Changing their super-premium formula, is essentially a big departure from the iconic heritage of the Ben & Jerry’s brand.  Aligning their products with Haagen-Dazs has the potential for loosing brand loyalty.  Since super-premium customers are quality versus price conscious, loss of sales from this choice is a real possibility.

Retaining the Vermont heritage, is really Ben & Jerry’s “Strategic Sweet Spot” (“Can You Say What Your Strategy Is?”), the Vermont dairy ingredients, high flavoring percentage, mix-in concept, the quirkiness of the individual flavor names, and enduring hippie image of the co-founders, have all created Ben & Jerry’s strategic sweet spot (it cannot be found in their competitor).  Given the new third production facility may bring all production in house (eliminating Dryer’s production), eliminating costs of shipping Vermont ingredients to Indiana, and focusing on reducing the product line, has the possibility of returning Ben & Jerry’s to profitability for the long term.

As the high-fat culprit health trend of the nineties has now recently reversed with new health research, I would not be surprised to learn that Ben & Jerry’s has a strong current position in the super premium segment.

(The co-founders social mission still remains – Ben & Jerry arrested at Capitol.

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