Ben and Jerrys JapanGroup-2

Ben and JerrysCompany Profile

Ice-cream company founded by Ben Cohen and Jerry Greenfield in 1978.

Philosophy: Anti-corporate Style, socially Responsible ,Caring Capitalism.

Product Brand Image: Super-premium product category with funky and caring image.

Distribution network across US with second highest Market Share by 1994 in super-premium Category.

Opportunistic, not strategic forays into Foreign market .

Ben and JerrysCompany in 1997:

Recovered from a loss in 1994.

Market Share and Profit on decline, threatening

Survival and contribution towards social cause.

Operating at half of Plant Capacity.

Ben and Jerrys Road AheadDeclining profit and market share in a well-distributed market(US): Indication of product in declining phase of Life Cycle.

Future growth: New Product or Market.

Japan; the 2nd Largest Ice-cream Market in the world.

BJIC already exploring options in Japan.

Porters 5 forces analysis of ice-cream market in JapanThreat for Entry:

Highly complex distribution network.Distance for Shipping frozen food is immense.Threat of Substitutes:

Atleast Six(06) Japanese manufacturers sell super-premium product.

Porters 5 forces analysis of ice-cream market in JapanBargaining Power of Buyers:

Affluent consumers; demand for high quality ice-cream with variety in flavour/style.Shift towards animal product is still underway.

Bargaining Power of Suppliers:

Likely to use US facility; so no new supplier for entry into Japan.

Porters 5 forces analysis of ice-cream market in JapanRivalry:Has to fight for shelf-space with similar products including that of leader of the product segment Haagen-Dazs: the US rival.

SWOT Analysis of BJIC in context of entry into JapanSTRENGTH:Product: High Quality & VarietyExpertise in Super-Premium segment.No need for capacity addition.WEAKNESS:Lack of strategic marketing plan for entry in foreign marketsLack of commitment and managerial resources visible in earlier ventures in to foreign markets

SWOT Analysis of BJIC in context of entry into JapanOPPORTUNITY:Strong market with excellent growth potentialComparative lower consumption of dairy products: potential for growth, rising income and affordability of refrigerator.No need for consumer education on the product.Falling Tariff.

SWOT Analysis of BJIC in context of entry into JapanTHREAT:Haggen Dazs as an established player in Japan.Local Competition.Time of economic slowdown (Thai currency depreciation):a threat, can turn into an opportunity as small affordable luxuries can do well in place of major luxuries beyond the reach of consumers.

Business case for AllianceIt is easier to build from scratch in unexplored markets than try to undo and fix past mistakes in explored markets.It is imperative upon BJIC to give Haagen-Dazs serious competition in huge Japanese market which is providing highest margins.High managerial and financial commitment required for a complex market like Japan.Ice-Cream; mostly sold in convenience stores in Japan. A daunting task for new entrants to gain access to them without local help.Late entry into Japan.

Partner assessment and selection

Develop Criteria

Identify Potential Partners

Identify Short List

Conduct Due Diligence

Develop Criteria for selection

Access for large distribution network in Japan

Financial risk

Political risk

Control of marketing development

Acquiring new capabilities

Gaining scale

Immediate launch capability

Identify Potential Partners

1. Dreyers:Ben and Jerrys largest distributer in US Not perceived as a direct competitor to Ben and Jerrys Failed due to JIT and retailer demands

2. Meiji Milk products & Mitsubishi:Very strong distribution resources, including an exclusive supply contract for Tokyo DisneylandHave competing super premium brand called Aya.Option became long shot on account of earlier friction with Mitsubishi on deforestation

3. Arrangement with ad agency & open a scoop shop at highly visible new retail development about to be built at Tokyo Disneyland

4. Forego Japan market- as financial crisis may spread across asia,which makes economics of exporting ice-cream infeasible

5. 7 eleven

6. Ken Yamada, Dominos pizza

Identify Short List

Yamada:

Advantages:Knows frozen foods, have entrepreneurial spirit, and represents considerable strength with his success in launching and building up dominos

Dominos already offered ice cream cups as a part of its delivery service in Japan

Relief from the effort to position the brand, devising and orchestrating the initial launch & marketing and distribution

Helps in market study by adding select flavours of Ben and Jerry's ice-cream cups to Dominos delivery menu

Identify Short ListYamada:

Disadvantages:

Insists on having exclusive rights to the entire Japan market, with full control of all branding and marketing efforts there giving up control of potentially major market could not be taken lightly

No marketing plan is available for consideration-as Yamada does it only after reaching agreement

Advantages with 7 Eleven:

Immediate placement in freezer compartments of over 7000 convenience stores in Japan

Consumer -store share of market had increased (40% of super-premium ice-cream sales)

Reduces distribution costs that are typical of multilayered distribution system in Japan

Can have control of market development it might want to pursue

Identify Short List

Identify Short ListDisadvantages with 7 Eleven:

Danger of becoming only one of many brands and store brand , cannot build its own brand capital Balance of power would be overwhelmingly in the retailer favourPutting too many eggs in one basket - Kiss of death to enter the market through some kind of exclusive arrangement with big 7 ElevenDanger of falling out7 Eleven JIT approachCareful meeting of orders and No order shifting7 Eleven design of package art, which does not include Ben and Jerrys photo affects prospects of global brandingCannot help Ben and Jerry's to develop other distribution channels in JapanNo commitment for promotional efforts and no budget for marketing campaignRisk that both US and Japan market is controlled by 7 Eleven

Our recommendation for Alliance 7 Eleven

Immediate launchControl over marketing developmentWorking with known partnerTapping of consumer store marketing potentialProven capability

Value in alliance for partnersValue for 7 Eleven:

Something new to Japan and particularly unique with its chunksFailed to replicate super premium ice-creamObvious market as 711 will not commit shelf space for any doubtful product

Value for Ben and Jerrys:

Survivability by expanding scale of operation in foreign market It will retain independence in control of marketing Readily available huge distribution and sales network Utilisation of its excess capacity.Assured product launch to capture summer season.Increasing share of convenience stores in ice cream sales

Thank You

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