Soft Drink Industry Essay Research Paper Executive

Soft Drink Industry Essay, Research Paper

Executive Summary

The word ‘Saturation’ does not exist in the dictionary of the U.A.E. Year by year, new products and their competing items have entered into the field and have successfully created a slot for themselves. This phenomenon is greatly supported by the open down policy of the local government to the people coming from other lands for settlement and tourism.

Ice creams are a product that has not seen their prime in the U.A.E. It’s potential is tapped in a meager form. Not that the commodity is in short supply. There is ample ice-cream available even at the moment. But, there is great scope of habitualizing the inhabitants of this place to consume more of the product, by exploiting the U.A.E. climate to its best potential. This statement vindicates the statistics that while an average person in Australia consumes 36.87 pints of ice cream, and in the United States 30.04 pints, the consumption in U.A.E. is only 6 pints per capita. Thus, even if the consumption is increased by 6 times for a person here, we will still be comparable to Australia and will need more effort to become world leader in consumption. This indicates the amount of vacuum existing in the U.A.E for the growth in the Ice-cream consumption.

The bottom line is a ‘Difference’. Up until now the ice creams that are being sold in the U.A.E. are mostly the conventional stuff and it will bring a sea change in the minds of consumers about ice creams if they are given something different at affordable prices and at accessible locations. One such company that can meet all these interests is Ben & Jerry’s.

We are a group of investors now planning to open Ben & Jerry’s ice cream parlor. The food and beverage industry has been in a boom. Therefore we plan to make our mark in the industry as the “premium” ice cream and yoghurt parlor in the country. U.A.E has a multi-cultural environment thus providing a good market for Ben&Jerry’s.. Ben&Jerry’s is the ‘difference’ which can fit in the slot to help bring

up the per capita consumption of the country. Most of their ice creams are made from fresh fruits, which hardly any other maker has attempted.

Introduction & Background

The company Ben & Jerry’s had its humble beginning more than 70 years ago, when its founders started manufacturing ice cream with a hand – cranked machine. Today, it offers the widest range of ice creams and frozen deserts in packs, including cups, bulks, and cones. The brand enjoys its reputation for successful innovation and development of flavors and its new offerings are eagerly awaited every summer.

Current Market Situation

The Marketing Environment- The United Arab Emirates has an ice cream market of Dh140 million, yet it has one of the lowest consumption (6.00 per capita/ pints) of ice-cream when compared to Australia which consumes 36.87 per capita / pints and USA 30.04 pints.

The ice-cream parlors Baskin Robbins enjoys having a monopoly followed by Haagen-Dazsas and Breslers. There are other non-famous parlors in some shopping centers and malls. Considering that there is two major franchises in the U.A.E market there is a high scope in entering the ice-cream industry. As for the external environment, it is divided in the following manner.

Competitive Environment- There is high degree of competition in the foodstuff industry. In the ice-cream industry, the market share is evenly distributed with Nestle being the market leader, followed by Walls and then by Kwality. Recenlty Hag n’ Das has also come up with major marketing schemes and are aggressively marketing their ice creams. They have a parlor opened at Al Diyafah Street in Deira. There is no official study to the exact market share. The prices in the parlors are about 10% higher to that of franchises in London and Canada. The other competitors in the family line are Igloo, Unikai, Kimo Cadbury, Mamma- Mia, and also those previously mentioned. Hags n’ Das, Cadbury’s, Baskin Robbins and have an importation, the rest are local manufacturers. Below mentioned is the approximate market share.

Estimates provided by Kwality and Unikai year 1996

Overall market growth 20% on yearly basis

Social and Cultural environment- We intend to target our products to the affluent society of Asian sub continent where they prefer fresh fruits, the attempt which is being made to introduce ice-cream made of fresh fruits are likely to catch up in no time even if they are slightly higher priced as compared to conventional ice-cream. Since conventional ice creams like that of Vanilla, Chocolate, Strawberry will also be produced, we have not neglected that segment too.

From the research conducted it was evident that most of the ice cream consumers want a change from the normal ice creams available and have also shown much excitement towards the opening of Ben & Jerry’s in Dubai.

Taking into consideration the hot and the humid climatic conditions, people show acceptance towards cold foodstuff – whether cold drinks or the ice creams. Ice creams are not consumed on daily basis, but families do buy and consume it in bulk(family packs of Bulk ice-cream 1litre, to 5litre containers).

The average income per family is about Dh. 5,000/- in which the consumers can afford to consume the ice creams in parlors.

Legal and Political-Rules and Regulations-

1. Trade license for importing foodstuff.

2. Import & export license.

3. Health certificate of the food we are importing.

4. Original Invoice.

A very important step should be done before anything. Which is to get a sample in advance from the food we intend to import and send it to the lab at the health department which is located at the port, the results of the experiments are given within an hour. The other way to do it is by importing the goods and at the port we check them in the lab. The food will be shipped in a cold container. After certifying the documents the goods are released from the port then and before storing the municipality should approve it, after that there will be an inspection every now and then from the ministry of health. They inspect the packaging, the delivery method, and the expiry date.

Our approach to Chamber of Commerce was not very productive as we understood that not only do most of the countries around the world not have any Franchising law but Chambers of Commerce also does not involve themselves in this exercise. The simplest system to know about the various Franchises available could be to approach the trade or diplomatic missions of various countries who have substantial data on established branches in various categories.

Economic Conditions-Compared to other GCC, countries, it has political stability, very low inflation, the stability of the currency against the world’s major currencies and affective bank industries. The Dirham is pegged to the dollar and it is exchanged at 3.665 for a dollar. The government is giving new opportunities to make the economy less dependent on the oil revenues. The per capita living is at $23,500 same to that of NewYork, which shows that there is a high consumption on the disposable income.

Technological environment-

1) Cold storage containers: the importation of ice creams requires the use of Cold storage containers, which can be easily leased from the companies.

2) The cold storage warehouse: which will be located at the Jebel Ali Free Zone

3) Chillers: will be used at the super markets to store Ben & Jerry’s ice cream products.

4) Marketing Information System: Most of the ice cream parlors in Dubai use a computerized system to record the sales, however they do not have any system which record customer data, customer liking, and their addresses. We will use such a system that will enable us to provide them home delivery without the hassle of asking their addresses again and again. This will provide customer satisfaction and their reactions which will enable us to respond to their needs better and form a base for the primary data for future research.

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Opportunities

? Ben & Jerry’s is well established Brand in Europe and thus has an existing potential clientele with the European expat population.

? Ben & Jerry’s has a huge market in terms of U.A.E. as it has a very high per capita consumption of ice creams.

? Ben & Jerry’s has also the option to export to the other G.C.C. countries and other Middle East countries.

Threats

? Ben & Jerry’s has to set up a project of international standards will have to invest in moneys which to date have not done so, and might find it difficult to sustain the profitability for the 1st few years.

? The other players already have a head start over Ben & Jerry’s over the past 2 decades, and are very well established in the market.

? To generate consumer awareness, product trials and store traffic, Vadilal will have to spend big amount of moneys in terms of advertising and promotions, which will be in excess of what the other multinational brands are spending.

? The embargo on certain flavors due to specific ingredients that are prohibited in the U.A.E. Ingredients such as gelatine or those specially derived from pig fat.

Segmentation

Market segmentation process:

1. Identify dimensions: The dimension is already identified. We want to go in for ice cream business.

2. Develop relevant market segment profile: Ice cream is an item, which appeals to all the sectors of society. We can cater to the following segments:

? Families

? Kids (1-12 yrs)

? Teenagers (13-20)

? Young adults (20-35)

? Adults (35 & above)

3. Forecast total market potential for each segment:

a) Analyze competitive forces within each segment: Strong competition exists for families, kids, teenagers, and young adult categories from Baskin Robins, TCBY, and Bresler’s and Haagen-Dazs. These are our main competitors.

b) Determine marketing mix to serve each segment: We have the capabilities and resources to cater to all of the above segments and the marketing mix is discussed later in the case.

4. Forecast own market share for each segments.

5. Estimate cost/Benefits for each segment:

6. Do benefits achieve company and justify development of each segment: Yes, benefits each of these segments will result in customer satisfaction and achieve our organizational objectives.

7. Decision on selection of target market segment: We think that the best segment is that of Families, teenagers, and young adults.

Based on our research we are going to segment our market based on demographics segmentation. Under this we shall attract families who have a middle social class or above. In addition to this our target group will include young people (17 & above). We shall attract families and young people by appealing to their motives and lifestyles. We will be using unconcentrated strategy to attract customers.

The marketing research process is a five-step application of the scientific method that includes:

1. Defining the problem: We needed an initial market research to determine the following aspects:

? Awareness of Ben & Jerry’s.

? Acceptance level of fresh fruit ice creams

? Share of competitive brands.

? Target customer’s tastes and preferences

2. Formulating hypothesis: Based on all the insight and knowledge available about the problem from previous research studies and other sources our null hypothesis is

‘ Ben & Jerry’s is a known, and accepted brand.’ Alternative hypothesis was ‘ Ben & Jerry’s is not a known and not at all an accepted brand.’

3. Research Design: Our research design was a mix of descriptive and diagnostic approach. We chose descriptive research to find out and understand the characteristics of Dubai’s ice cream market and target audience’s buying behavior. Diagnostic research design gave us information on reasons for customer’s choices.

4. Data Collection: Data was collected from 2 sources: Secondary and Primary.

? Secondary sources: We collected data from published information in newspapers and magazines

? Primary sources: Our primary sources included, questionnaires, telephone interviews, and personal interviews.

5. Interpretations: Based on the analysis we have reached the conclusion that Ben & Jerry’s is a considerably accepted brand. It’s products will be definitely be welcomed. Around 65% of the people are aware of Ben & Jerry’s. Our main competitor is Baskin Robins for their parlors and Walls, Nestle` etc for retailer ice creams

Product Mix

Product means the need-satisfying offering of a firm. Ben & Jerry’s is going to provide a fast moving consumer good (FMCG) which is going to satisfy the target audience. Ben & Jerry’s ice creams are going to create form utility for the target base. Ben & Jerry’s ice creams will be a shopping heterogeneous product in U.A.E. A shopping heterogeneous product is that which a consumer sees as different – and wants to inspect for quality and suitability. Quality and style matter more than price. These ice creams will be of highest quality and it will be perceived as being of highest quality due to its customer satisfying characteristics. The parlors will provide excellent customer services for parlor visitors.

Product Development Strategies

We shall be using Market Development Strategy i.e. introducing an already existing Ben & Jerry’s ice cream in a new market i.e. U.A.E.

This product line will benefit us in the following ways:

? Risk will be reduced as our portfolio is extended.

? We can fall back on the successful products

? We will be known to cater a wide assortment of ice creams and thus our image will be improved.

? We will re-invest all our profits within the same product line and extend our product line.

Based on the research ,we have found out that 43% people are aware of Ben & Jerry’s. To create more awareness and sales, we shall follow the product adoption process. First, promotions will be carried out to create widespread awareness of Ben & Jerry’s and its availability in U.A.E. Samples will be arranged to help target consumers make the initial purchase decision. At the same time, we will emphasize quality control and provide solid guarantee to reinforce buyer opinion during the evaluation stage. Finally, production and physical distribution will be linked to pattern of adoption and repeat purchases.

Product Life Cycle

Ben & Jerry’s is in its introductory stage in the U.A.E. The sales will be low in this stage. People aren’t looking for Ben & Jerry’s ice creams. We expect this stage to last for 6 months during which intensive promotions will be carried out and Ben & Jerry’s ice creams will be the talk of the town. During this stage we shall be focusing only on the sub continent crowd and later on extending our target base to other nationalities as well.

Factors that play a major role in determining the length of each stage are relative advantage, compatibility, complexity, divisibility, and communicability. Our introductory stage will be very short lasting around 6 months due to :

1. Relative advantage of providing fresh fruit ice creams and home delivery services.

2. It is the simplest and most exquisite ice cream.

3. . Our message to the public is simple, “Not just any ice cream!”

Packaging has always been an important aspect of the product offer but today it is carrying more of promotional burden than in the past.

Ben & Jerry’s, understanding the importance of packaging and how it would affect the promotion of the product has produced the packages keeping in mind the following aspects:

1. It should contain, protect and dispense the ice cream.

2. It should provide point of purchase advertising, and perform the role of a continuous communicator.

3. It should serve as an attention-giving device.

4. It should provide reminder to the current users(this will be applicable when the product reaches the growth stage)

5. It should be source of information, about the ingredients and potential cautions.

6. It should provide a vehicle for announcing promotion and sales.

7. It should promise physical and emotional end benefits.

Ben & Jerry’s package should help sell Ben & Jerry’s ’s “Fresh fruit ice cream’, ‘A vegetarian ice cream’ and ‘ A not so ordinary ice cream’ image.

Four areas which have to be considered for designing Ben & Jerry’s package:

1. Verbal: The words used to describe the product or the caption line has to be attractive enough to catch the buyers or even the passers by attention.

2. Visual: The package should use sober yet attractive colors to be able to hold the shopper’s concentration and fascinate the buyer to buy the product.

3. Function: The function of the package should (firstly), protect the ice cream inside, stop it from spoilage or being melted. Secondly, it has to be convenient to be used the buyer i.e. the package should be user friendly (cups and the cones should be appropriately packed.) Thirdly, it should facilitate distribution in the supermarkets.

4. Container composition: The containers used to hold ice creams should be made of plastic, as it is the best container that can be used. Use of cardboard boxes doesn’t give it a very good image and above all if the ice cream melts than the package will become soggy and will leak. The new Ben & Jerry’s pint is being manufactured with unbleached paper.

Price Mix

Let us examine the pricing objective that Ben & Jerry’s will pursue:

Sales oriented objectives: We seek some level of unit sales and gain 40% of ice cream market in U.A.E. We seek to achieve this objective in order to have better economies of scale than competitors. This is a sensible objective because the ice cream market is rapidly growing. We hope that larger future volume will justify sacrificing some profit in the short run. We shall keep our price flexible.

Price-Level policies – over the product life cycle

We shall pursue a penetration pricing policy throughout the introductory and growth stage. It is attractive to us because selling larger quantities will result in lower costs because of economies of scale. Penetration pricing will also help us deal with competition during growth stage. Our prices will be as follows:

Type Product Price

(in AED)

Single Scoop

Flavored Ice cream 3.00

Fresh Fruit ice cream 4.00

Double Scoop 5.00

Fresh Fruit ice cream 7.00

Sundaes 8.50

Small Cup – 50 ml 1.00

Big Cup – 100 ml 2.50

500 ml pack Flavored Ice cream

Fresh Fruit ice cream 5.00

7.00

1 liter pack Flavored Ice cream

Fresh Fruit ice cream 7.00

10.00

2 litter pack Flavored Ice cream

Fresh Fruit ice cream 12.00

15.00

Large glass Milk Shake 7.50

Regular glass Milk Shake 4.50

Additional toppings 0.50 (each)

Large glass Iced yoghurt 5.50

Regular glass Iced yoghurt 3.50

Discount Policies

We shall offer the following types of discounts to our retailers and customers:

Quantity discounts: These discounts will be offered to encourage customers to buy in larger amounts. This will let us get more business from both retailers and target audience. We shall offer noncumulative quantity discounts. These discounts will be given for individual bulk order.

In addition to this we shall also offer cash discounts to retailers. The term for this will be 4/10, net 3.

Allowances: Advertising allowances will be given to retailers to encourage them to advertise or otherwise promote Ben & Jerry’s ice creams. Promotional allowances will also be offered to customers during promotions.

Place Mix

Where to locate usually depend on consumers. An ice-cream parlor located any where in Dubai would do well due to its humidity but it is more important to consider the consumers purchasing patterns and locality of incessant shopping. The main objective is to make the ice cream available to the consumers in sufficient quantities, at the right place and time.

Creating awareness of an unfamiliar product requires a location were there are large crowds of people. This way Ben & Jerry’s ice creams is constantly exposed to its potential customers. Another important aspect to consider is our target market. Where exactly do our potential customers dwell? This would depend on a demographic research based on age. According to research, our potential customers are children and teenagers. However, young adults are also keen on purchasing ice creams. Place decisions need to be considered carefully. A wrong decision can cost millions and lead to a loss. The other 4 Ps of marketing can always be adjusted but once place decisions are made, it is difficult to modify.

Strategic Decision Making in Place

Place objectives

As Dubai consists of many families and since children and most teenagers depend on their parent’s for financial support, it is important to find a location where families, children and young teenagers dwell. According to our observation, many of the shopping areas in Dubai, such as Al Diyafah Street, Meena Bazaar, Al Nasr Square and Al Riqqa Street are crowded with people usually families and teenagers. According to the research 60% of people are suggesting to have our franchise outlet openend on Al Riqqa Street.

Al Riqqa Street is a cosmopolitan area consisting of:

1. Shops

2. Restaurants

3. A cinema

4. Shopping complex

5. Residential areas

6. Offices- Airlines

Riqqa Street has attracted a lot of tourists. Situated in the heart of the city, it provides Ben & Jerry’s with the opportunity to exploit its market. The Dubai shopping festivals is also held at this area.

Types of channels

Wholesalers and Retailers

Ben & Jerry’s plans to adopt an indirect method of marketing. Direct marketing is not practical because a lot of consumers are not aware of Ben & Jerry’s ice creams. Thus, they would be reluctant to buy it. The franchise itself acts as the wholesaler and producer, while the supermarkets are its retailers. An intensive distribution is appropriate, as many consumers prefer to purchase their groceries from supermarkets outlets located in the neighborhood. Since the sales of Ben & Jerry’s directly depends on its availability, it is essential to have Ben & Jerry’s ice creams distributed into supermarkets that are located in residual areas, such as Karama which is on Zabeel road; Al Shaab colony at Deira, Ghusais and Satwa.

Channel relationships must be managed

Building a good relationship is Ben & Jerry’s main aim, as the supermarket outlets are a main source of revenue apart from the parlor proceeds. The supermarkets are also an advantage to Ben & Jerry’s because it creates rapid awareness and deals with mass selling, resulting in more sales. The franchise needs to develop an understanding with all its channel distributors through a cooperative relationship, which can only be attained if channels coordinate and work together with one common objectives, i.e. to satisfy their consumers

Middlemen/ facilitators needed

Reaching consumers throughout many geographical areas

Maintaining good relationships with the retailers are important. Majority of the consumers are likely to purchase ice creams from a supermarket than from a parlor. Supermarket attendants are the actual promoters of the ice cream. They provide the consumer with details and information of the ice cream and are more likely to serve their customers better. Since Ben & Jerry’s consumers are spread across a large geographical area, supermarkets are the only way to reach their final consumers at a wide span.

Physical Distribution

Ben & Jerry’s needs to consider how their ice creams and products are to be physically distributed. Ice reams are not fragile products, thus reducing the concern for unexpected damage. However, they have to consider the costs of transportation of their ice cream and other diary products because consumers are more likely to appreciate a product that is inexpensive but at the same time high in quality. Road is the only mode of transportation in Dubai. Therefore, Ben & Jerry’s will consider hiring trucks or vans of their own to distribute their products.

Ben & Jerry’s aims to collaborate with its retailers, as we believe that it is important to cooperate and work efficiently in order to attain profitability and gain consumer’s interest. Considering the view of our consumers is our first priority.

Promotion

We will have to adopt two main forms of Non-Personal form of selling, which will involve:

Mass Selling:

With our target market, which is so large in Dubai, Mass selling seems to be the most appropriate and feasible one. Under Mass Selling we will adopt two methods.

? Advertising

? Sales Promotion

Let’s analyze the strategic palling for each of these.

Advertising:

The achievement of our mass selling will be accomplished through Advertising. A paid form of non-personal presentation of ideas, goods and services. Ben & Jerry’s will use various forms of media to inform and persuade its target audience, which will be discussed further in our media selection section.

Advertising objectives:

Our objectives need to be specific; they have to communicate the right message-

Short-Term objectives-

? Help position Ben & Jerry’s ice creams, in Dubai, by informing and persuading our target market.

? Help obtain desirable outlets and tell consumers where they can purchase Ben & Jerry’s here.

? Create product differentiation

? Get immediate results.

Long-term objectives-

? Create brand loyalty

? Update our Promotional mix, through constant feedback from our consumers

? Expand market share by capturing all the super/hyper markets and opening up our branches of ice-cream parlors throughout Dubai.

Media selection

Will depend upon the most practical, appropriate and cost effective ones that will work the best in this part of the world.

1. Press & magazines-very popular and effective.

2. Radio – Most of the people here while driving listen to the radio the most, as its FM’s are very popular. Hum FM is an Indian/ Pakistani Radio channel and many people tune into it during the day. We think radio here will work most effectively.

3. TV commercials- not very popular, but essential to create more visual appeal for our ice creams.

4. Billboards and banners- very expensive but are hi-tech and appealing, once we establish ourselves we can take advantage of this medium here.

Media schedule

Budget:

Initially Ben & Jerry’s will have to invest from its initial capital requirements. The initial capital requirements are Dh.1,000,000/- out of which Dh. 144,000/- have been allotted for promotion. But as Ben & Jerry’s starts generating revenue then a combination of the following methods will be used:

? % of sales method: Following this method Ben & Jerry’s will set aside 15% of its revenue from sales for promotion. Although when the entire amount will not be used the n it will directly go into the “promotion contingency budget”. This will be used when the sales of Ben & Jerry’s will fall i.e. during the winter season in Dubai (end of November-mid of February 3.5 months or less approximately). The amount from the contingency budget will be used to level sales during theses months.

? Task-objectives method: Using this method, the promotion budget will be divided among various tasks- sales promotion-40%, advertising-50% and public relations-10%.This allocation will be maintained till Ben & Jerry’s moves from the introductory stage to the growth stage and when all its innovators turn into early adopters.

According to our budget we have allocated 50% for Advertising. Out of which:

? Radio- Cost of advertising a radio ad using HUM FM: Dh.250 per second =250*30seconds =Dh.7500/-

? TV-

? Press & magazines-

? Billboards & banners-AED 7500/-

Who will do the work?

Advertising Agency- Are specialists in planning and handling mass selling details? They will help us plan and decide the right channel of communicating with our consumers and help us do our job more economically.

Our second method of mass Selling will be:

Sales Promotion

Other than advertising, we need to stimulate interest, trial and purchase of our product.

Ben & Jerry’s will use this method intensively in Dubai because:

? It is very popular in Dubai

? This method also produces immediate results, because the product is immediately reachable for e.g. promotions in supermarkets and most importantly if the consumer likes the product, the purchase decision can be made on the spot.

Sales Promotional objectives

? Make people aware of the promotion through ads and word of mouth

? Help them understand the promotion, the place price & the offer, what it means

? Produce immediate buying results

? Feedback- makes our consumers come back for more.

Methods- aimed at our target consumers

1. Contests

2. Coupons- very effective in Dubai

3. Chiller plays

4. Point of purchase

5. Banners and streams next to POS.

Methods – aimed at our retailers (supermarkets)

Trade promotions- The objective here is to encourage them to buy and stock our items in large quantities.

1. Price deals

2. Promotional allowances

3. Merchandise aids

4. Calendars

5. Gifts

Over all promotional objectives:

? to provide information in the right manner

? affect behavior- persuade them to stop and think about Ben & Jerry’s

? stimulate demand

? Create Product Differentiation- this is to differentiate our ice creams, from that of our competitors. (E.g. Fresh fruits for the healthy feeling).

? Increasing our product value by this differentiation and quality service.

? finally increasing sales and revenues

Communication Process

Attention Interest Desire Action

This process is very essential, thought w