Ben Jerry's Pricing Strategy example essay topic

Executive Summary Ben and Jerrys is a successful ice cream company with many strengths and weaknesses. The company faces serious competition, financial struggles, economic and social influences, all of which are covered in my paper. I also discussed some recommendations I have for the companies success. Ben and Jerry's is one of the top ice cream companies around. They have had many ups and downs throughout the history of the company, but overall, they have overcome most of their hardships. They have some serious competition facing them in the ice cream industry; they have faced financial struggles, internal issues, and some social and economic factors.

In conclusion, I have come up with a few recommendations for the company to possibly improve things in the future. Haagen Dazs is currently the main competitor in the concentrated market place for super premium ice cream. Substitutes are however available. There are other ice creams not in the "super premium" category.

To an extent, these are the real competition. However, for the market B&J caters for, their strategies should not have a great impact on B&J. The frozen yogurt lines which B&J now provides, also has a number of direct competitors to deal with. Dealing with other substitutes is not that simple. Expensive (or inexpensive) chocolate, cakes, croissants and other desserts are realistic options for consumers. Other companies are going to try to assure you that their product is the perfect accompaniment to any meal. B&J needs to be aware of this.

How he / she makes the choice for ice cream (as opposed to chocolate, etc. ), then super premium (as opposed to premium or ordinary) and finally B&J (as opposed to Haagen Dazs etc.) is imperative. The possibility of new competition in the market place is limited by two major problems, the brand and distribution. Remembering that these are higher market consumers, where by cheap alternatives are not necessarily desired, then the key element is the brand. This brand and the image that comes along with it, are something currently only Haagen Dazs and B&J have.

This emotional tie related to B&J's and everything it possesses beyond what it is in itself (a good tasting ice cream), is something that will be difficult to imitate. It is a question of "I wouldn't be seen dead eating another ice cream" as opposed to "this is cheaper and tastes just like B&J's so I'll buy this from now on". The other obstacle concerns distribution. With ice cream, the idea of selling products through the Internet, despite the dried ice, which may accompany it, is not a likely option. B&J's is a fresh ice cream and by nature, difficult to transport. Consequently, distribution to stores around the USA and globally will be expensive and require partners, such as Dreyer's, that have an extensive transportation network.

This is potentially a concern or risk for B&J's. Having a rival manufacturer distributing their ice cream is likely to cause conflict, and B&J should change this immediately or have an adequate back up plan. With both the above barriers, the key competitor may be the other ice cream manufacturer in the premium or ordinary market, especially the premium market. As it is, these competitors already have the distribution network and the know how. But, it will still take a large investment for these manufacturers to sell their image. B&J's also has their share of internal issues.

Due to the baby boom in 1994 the target market of Ben & Jerry has declined vastly. Although Ben & Jerry still hold a large percentage of the small market share, the company needs to decide on whether this target segment is worth sticking with. At one stage, Ben & Jerry's pricing strategy worked really well, however it has become evident that demand over recent years has shifted towards lower priced products, leaving pricing strategies being a big issue for the company. Until 1994, all of Ben & Jerry's promotions were gained through the company's socially conscious practices. However price wars with main competitors left the company having to pull funds off advertising campaigns to fund price discounts and store coupons. Due to the fact that imitations for the product are being developed more rapidly, Ben & Jerry have changed their primary marketing goal to establish products that cannot be imitated, but the technological developments of the company have not allowed them to launch the products within a decent time limit.

B&J's mission statement includes the need for a wide variety of innovative flavors. Five years to find the perfect coffee bean seems unnecessary. Coffee ice cream, in this period, may have become undesired by the customer. This scenario is compounded by, the quick replication by competitors, and the high costs related to manufacturing each different flavor. As a result, it is key to stop producing brands not received well, as well as introducing new flavors quickly. "Flavor of the month" may be a way of bringing consumers to them on a regular basis.

Research will be key in identifying the market in any region or country B&J wishes to operate, especially into consumers' needs and wants. The way choices are made needs to be understood and the positioning of B&J needs to accommodate this. The decision is based, amongst others, by the mood of the potential consumer at the time of decision. Ben & Jerry seem to be proud of the success rate of their relaxed, casual culture and having employees involved in the decision making. However this policy needs to be reviewed as decisions are taking too long to be made due to large staffing numbers.

But with staff turnover very low, changing the decision making process could be very difficult. If it is not bad enough that the company is losing market share, the company putting more funds into promoting their image, than to the shareholders is irritating investors even more. A happy medium will have to be found for Ben & Jerry to gain confidence back from their investors. Ben & Jerry exist in a consolidated market place with just two major companies.

Themselves and Haagen-Dazs. There is severe competition between the 2 players. If this rivalry is weak, then the two companies have an opportunity to raise prices and earn greater profits. However, if rivalry is strong, significant price competition, including price wars, can occur.

This competition could push the prices down in the long run. The amount of demand also affects the intensity of internal rivalry between companies. Growing demand tends to reduce rivalry as companies can sell more without taking away from other companies, resulting in high profits. On the contrary, declining demand results in more rivalry, as companies fight to maintain profit. Ben and Jerrys has also faced some economic and social factors that have affected them. In 1994, sales were flat, profits were down, and the company's stock prices had fallen to half its value.

While Ben & Jerry had thrived in the 1980's, the coming of the baby boom in the 1990's meant a middle class society that was more health conscious. The company realizing its fall in sales, quickly responded to the changes in consumer demands and introduced Ben & Jerry Lite. This line failed. It seems that Ben & Jerry failed to forecast and acknowledge the changes in consumer tastes, and was faced with increasing competition with Haagen-Dazs, which introduced its "low-fat Ultra Premium ice-cream". Their social commitments to their customer's community and suppliers have contributed to a successful and unique image, Ben & Jerry donated a portion of their sales from their "Rainforest Crunch Ice Cream" back into environmental preservation causes in South America. Ben & Jerry also established the "Ben & Jerry Foundation", which donated 7.5% of its pre-tax profits helping non-profit organizations, such as: an establishment in New York to help drug addicted pregnant women, and individuals and families affected by the AIDS virus in Brattleboro.

Such efforts had contributed to winning over certain consumers, however it is arguable to what extent this will have on winning the hearts of international consumers. So this makes one wonder how much the companies unique ways really affect consumers behavior. In my opinion, there are a few things that Ben and Jerry's could possibly do to improve their success in the upcoming future. In today's environment, change, rather than stability, is necessary. Rapid changes in technology, competition, and customers' demands have increased the rate at which companies such as Ben & Jerry's need to change their strategies and structures to survive in the market place. One of the reasons why B&J has lost market share is because they failed to change themselves and adapt to a new competitive environment.

To overcome this, Ben & Jerry need to identify the main barrier to change such as consumer tastes. This can be overcome through the development of a marketing plan, as there seems to be no real evidence that Ben & Jerry have done this. Employee productivity is one of the key components of a company's efficiency and cost structure, so this needs to be improved upon in order to make the company more competitive. The culture of the organization is strongly influenced by the founders, and changes will be hard to achieve. It is not recommended that the culture of the company be changed, but that devising new ways to increase employee productivity enhances it. I think that the employees would be most successful being put into self-managing teams.

Each team will be responsible for an entire task and time deadlines should be given. I also think that pay rewards should be given to the teams that complete their task to the highest standard. This option could lead to a more flexible work force, as employees will get to know each other's jobs within the company. It can also create a more equal organizational structure, which would make the decision making process a lot quicker and all employees will be involved. In conclusion, I think that Ben & Jerry has the potential to prosper as long as they: are prepared for upcoming changes in consumer needs and wants, compromise between maintaining their company image and satisfying their investors needs, and try to reduce their costs by considering all of their other options. Swot Analysis for Ben & JerryStrengthsBen & Jerry have an established and recognized brand name.

They have a relaxed, loyal and casual workforce. Good public and social image due to their principles in social awareness. Wide variety of flavors in ice cream for customers. Weaknesses Ben & Jerry have a limited target market.

The suppliers and distributors (such as Dryers) have high bargaining power, which allows them to raise their prices when they like. They have concentrated more on donating their money to charities therefore neglecting upcoming changes in trends. Declining market share. Slow development of new products.

Opportunities Ben & Jerry should seek to globalize their product to compete effectively. Change their current suppliers and distributors, which might enable them to be more cost effectiveThreatsThreat of substitutes Economical changes such as in inflation or consumer spending Social changes within the consumer market such as health conscience attitudes.

Bibliography

Ben and Jerrys Company Information, 2000.
Woody Jackson. 1 May 2000 web Dazs, 2000.
1 May 2000 web.