Case study 3: Competitive Advantages
Ice-Fili: Ice cream market in Russia
Here is a résumé of the Five forces model of the ice cream industry in Russia:
Threat of new entrants High
Threat of substitute High
Bargaining power of supplier Low
Bargaining power of customer High
Rivalry among competitors High
“What are the potential sources of competitive advantage in the Russian ice cream market?”
How do customers buy?
- Russians consume 2.5 kg of ice cream compared to the 16 kg in the USA. This is due to a different mode of consumption. Russians consume ice cream “on the go” as a snack – Spontaneous/impulsive purchase (no in-house consumption at the beginning) o Chanel of distribution
Kiosk: 49% of the ice cream
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Russian are more concerned about preservative than fat level. o In this case, Ice-Fili hold this competitive advantage since the company mainly use natural ingredients and do not use any preservatives or colorants (“Lakomka”). At the time of the case Ice-Fili’s ice cream are seen as a quality product which fit with the traditional recipe. At the opposite, Nestlé adds preservatives which distort the taste, but by using these ingredients, it decreases the total costs.
- Distribution Channel : o Ice-Fili’s ice cream are mainly sold through kiosks and minimarkets (80%). However Nestle also own his distribution channel.
- History : o Ice-Fili is a Russian company which implied that the company knows very well how customers behave and buy. So, the company can easily fit with the Russian demand (i.e. recipe) o Contrary to Nestlé, Ice-Fili runs its business since ages. Therefore, the company is well-known by the Russian customers.
- Research and development : o Ice-Fili produces more than 170 different product and adds 20 new products every year (diabetic ice cream). This means the company is still efficient in terms of research and development. o However, all these new products increase the fixed costs
- Marketing and communication o To enter the Russian market, Nestlé used agressive marketing and promotion. o Ice-Fili does not have such a budget to promote the brand
Since their biggest competitor is a foreign entity (Nestle) who uses western manufacturing practices and ingredients, one strategy may be to market heavily on the merits of all-natural ingredients. They have already joined an association which promotes domestic producers over foreign producers and should further capitalize on the gains made by this association. Substitution: Since one of the highest threats in the industry is the threat of substitution, Ice-Fili could look to diversify their offerings. This could mean producing a wider variety of food products, or it could mean selling/renting out unused capacity, particularly cold storage capacity, to other industries. Buyer Power: In order to mitigate the bargaining power of buyers, Ice-Fili may consider shifting a larger portion of their sales to direct-to-consumer channels as well as creating exclusive agreements with resellers. In addition, they could focus their marketing efforts on building brand loyalty. For products for which they aren’t able to secure licensing, such as Lakomka, they could rebrand it as “The Original” Lakomka or something similar that capitalizes on the longstanding popularity of the product. New Entrants: To combat the threat of new entrants, Ice-Fili should continue to focus on developing more efficient ways to produce ice-cream as well as the maturation of their distribution channels. If they are able to further add to
In contemporary China, people not only focus on what’s delicious, but also the health benefits that the food product had to offer. Frozen yogurt is a hybrid food, offering both a delicious taste and health benefits. The usage of fresh fruit and lower calorie ingredients has thrust frozen yogurt into popularity amongst dessert lovers worldwide, while still capturing the health food sector of the market. High quality and healthy food defined the Yogen Fruz culture and allow the company to appeal to its target market.
The target market is easily seen as young kids because of the adventurous flavours they have. However, anyone can easily be a part of their market, anyone who has a sweet tooth for ice cream.
An interior project called Gelatoria is being developed. To make this successful, it is important to become familiar with the industry not just by knowing the components and ingredients of product but also through familiarity with other factors correlated with the success and survivability in the market. The typical gelato shops in Italy are characterized by its unique atmosphere imitating the European lifestyle. Its homemade frozen desserts are the center of attraction not only for adults but for all consumers of all ages. Gelato is indeed popular in Italy as it is enjoyed by all kinds of consumers (D’amico, Nevstrueva, Guan, Gon, Annini, and Yang 8). This paper aims to provide a discussion of the cultural, economical and social factors that affect the industry of gelato, ice cream, yogurt and other frozen desserts. These factors will provide a deeper understanding why certain products become successful in specific regions and how culturally diverse products could be introduced to other nations.
To achieve that Ice-Fili will highlight its main asset: the fact that their ice creams are made using only natural products. This corresponds perfectly to the needs of Russian consumers and this is a very differentiating element with respect to its competitors.
Ice-Fili is the top ice cream producer in Russia. Currently, the company is experiencing tough competition with Nestle, Baskin-Robbins and regional ice cream producers. Its loss in market share due to their poor quality decisions-making after Russia became an open marketing in 1992. Nestle took great advantage of Ice-Fili’s low reaction adjustment and is taking over their market.
Ice-Fili’s marketing approach and product distribution could be seen as weaknesses in the company’s primary activities. In 2001 the firm started its first TV marketing campaign years after competitor’s advertised through the media outlets. To date Ice-Fili is still very inexperienced and far lacking of marketing strategies deployed by Western competitors such as Unilever and Nestle. Not only does Ice-Fili need to market more fiercely against competitors within industry, it must also compete against other consumables such as beverages and snacks. Another weakness is the distribution that is handed over to several distribution companies. There is a much higher chance (twice as likely) to find products of its biggest competitor Nestlé than those of Ice-Fili. Another detriment is how ice cream is viewed socially. Currently ice cream is primarily an impulse purchase. If Ice-Fili can change this outlook, it would result in an enormous
Nestle would also gain access to a very large share of the novelty ice cream market. As seen in Table B, Eskimo Pie owns 5.3% of this particular market. With Nestle not in the top 5 producers in this market, Eskimo Pie would
Andrew went on to tell us what he named the product he called it “Bolis”. Bolis is ice Popsicle in Spanish. He later told us what Bolis is made of “Bolis is made up of organic fruit like pineapple, mango, Jamaica ( a Mexican drink), lemon, and vanilla”
A trip to this ice-cream parlour will be a memorable one, as the owner ‘Rosa’ who has a great passion for ice- creams makes ice creams from the finest ingredients without using any additives or unhealthy stuff.
segment consuming frozen pizza and fresh pizza from supermarket , but Nestlé should ensure use
Ben & Jerry’s Homemade, Inc. has been in business since 1978. Approximately 40% of the world 's frozen dairy desserts, 5.6 billion liters per year, are manufactured at more than 450 U.S. ice cream plants. This makes the United States the largest producer of ice cream and related products in the world. With the world 's largest milk supply, an abundance of land, and investments in research & development, U.S. frozen dairy dessert production has remained
In the late 20th century, the ice cream industry market share was classified into frozen novelties and packaged ice cream, and packaged ice cream could be divided into super premium, premium and lower-price products. Dreyer’s Grand Ice cream Company mainly focused on the premium products.
Since then the company has continued to flourish; mergers and acquisitions, global investment and product innovation have seen Nestlé position itself as a “global leader in Nutrition, Health and Wellness” (Nestlé, 2015) and, according to Forbes (2016), it is the largest company within the food industry and the 33rd ranked company on the Global 2000 (Forbes, 2016). Whilst renowned for chocolate, it did not become a global leader on the strength of one product. Its portfolio includes, baby food, beverages, frozen food, prepared dishes and healthcare nutrition. Food and beverages in particular have been prevalent in the aggrandizement of the corporation.
Convenience is driving the frozen market sales globally as consumers are looking for healthy and less time-consuming meals (Seth and Randall, 2011). Private label is performing extremely