Market Analysis of Haagan-Dazs
- Pages: 7
- Word count: 1512
- Category: Marketing
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Jan Phillips is the newly hired ice cream product-market manager for Canada for Häagen-Dazs—the world’s leading brand of super premium ice cream (now available in 55 countries) and the market leader in the U.S. Haagen Dazs although owned by Pillsbury, in Canada is licensed to Nestle. (http://www.nestle.ca/en/Products/Browse_by_Brand/haagen_dazs.htm)
Pillsbury says Häagen-Dazs is profitable globally, with total sales of more than $900 million. The company saw its sales grow rapidly during the 1990s, but now its markets are facing significant change and very aggressive competition. Phillips is responsible for Häagen-Dazs’ ice cream strategy planning for Canada.
Overall, hard ice cream sales in Canada. have stayed flat at just under 300 million litres. Still, some new entries have made a big splash. Starbucks, the coffee king, is one such brand. In its first year in grocery-store freezer sections, its Frappuccino bars—in several flavours—were a big hit. Häagen-Dazs, along with a few other super premium producers, are continuing to grow at rates of 2 to 3 percent. But most other Canadian super premium producers are reporting flat sales, and some are going out of business. The easy availability of super premium ice cream in supermarkets has hurt some of these producers who sell through ice cream stores, which specialize in take-out cones, sundaes, and small containers of ice cream. It is also thought that, at least in part, the decline in sales growth of super premium ice cream in Canada since the early 1990s is due to competition from other products such as lower-calorie yogurts and low-fat ice cream.
Despite a real concern about healthy diets, Canadians seem to swing back and forth in their yearnings for low fat and rich taste. There is some evidence that “dessert junkies” who want to indulge without too much guilt are turning to low-fat frozen yogurt and low-fat ice cream. This has encouraged a number of super premium ice cream competitors to offer these products too. Pillsbury’s Häagen-Dazs, International Dairy Queen, and Baskin Robbins are selling frozen yogurt. The Canadian ice cream market is dominated by Nestle and Unilever and both are promoting gourmet versions of low-fat ice cream.
Because of the competition from low-fat products, Häagen-Dazs introduced a line of low-fat super premium ice cream. The low-fat line contains no more than three grams of fat per serving. That compares with six times more grams of fat in a half-cup serving of its full-fat versions. Häagen-Dazs believes that its low-fat super premium ice cream is better tasting than other alternatives. Its belief is that “people like to make every calorie count.” Having worked on the low-fat item for more than two years, it developed a process whereby a concentration of dairy proteins from lactose-reduced skim milk give a mouth-feel that approximates that of a higher-fat product. Häagen-Dazs sells its low-fat products in a variety of flavours.
Most ice cream products are considered economy and regular brands—priced at $3.00 to $7.00 for 2 litres. Super premium ice cream retails for $4.50 to $5.95 a half litre,. The retail price for a half litre of Häagen-Dazs is usually over $5.00. The low-fat version is comparably priced to the full-fat product.
Many other Canadian ice cream producers have turned to frozen yogurt for growth. Frozen yogurt sales were in a slump for a long time because many people didn’t like the tart taste. But after the product was reformulated it started to win customers. The difference is that today’s frozen yogurt tastes more like ice cream.
The yogurt market leader, TCBY (www.tcby.com), which had sales of only about $2 million in 1983, has risen to over $100 million in sales. It numbers over 2,500 shops worldwide and is franchised in over 67 countries. In Canada, yogurt makers are using aggressive promotion against ice cream. TCBY ads have preached: “Say goodbye to high calories—say goodbye to ice cream” and “All the pleasure, none of the guilt.” And the ads for its non-fat frozen yogurt emphasize: “Say goodbye to fat and high calories with the great taste of TCBY Non-fat Frozen Yogurt.” (http://www.tcbycanada.com/)
Baskin Robbins has introduced yogurt in many of its Canadian stores and has even changed its name to Baskin Robbins Ice Cream and Yogurt. (http://www.baskinrobbins.com/ ) Häagen-Dazs also offers yogurt in most of its stores. Although the flurry of consumer interest in low-fat yogurt and low-fat ice cream certainly created some new market opportunities, it is not clear how consumers will react to these products over the longer term. One reason is that many consumers who were initially excited about being able to buy a good tasting, low-fat frozen dessert have realized that low fat does not necessarily mean low calorie. In fact, Jan Phillips has been trying to identify a product that Häagen-Dazs could produce that would offer consumers great taste, low fat, and low calories all at the same time. One possibility she is seriously considering is to introduce a line of sorbets based on exotic fruits like kiwi and mango and that use low-calorie sweeteners.
A sorbet is basically the same as sherbet, but European sorbets usually have an icy texture and include less milk. This is the sort of product that Jan Phillips has in mind. She thinks that it might have an upscale appeal and also be different from what is already in the premium ice cream case.
On the other hand, calling a product by a different name doesn’t make it really new and different, and basic sherbet has been around for a long time and never been a big seller. Further, consumers don’t think of sorbet in the same way that they think about a rich-tasting bowl of ice cream. You don’t have to convince people that they might like premium ice cream. Sorbet, on the other hand, isn’t something that consumers crave and make a special trip to buy.
Further, Phillips is very conscious that the Häagen-Dazs brand should stand for high quality and the best ingredients. Yet, it’s not clear that consumers will think of sorbet as a premium product. Rather, they might just see it as ground-up ice with some flavouring thrown in. But if sorbet isn’t the right way to go with new-product development, how should Hãagen-Dazs counter the competition from other low-fat ice cream brands like Ben & Jerry’s and other new entries to the super premium category?
Evaluate what is happening in the ice cream market, especially regarding the apparent levelling off of super premium ice cream sales and the possibilities for growth of the sorbet market. Is Jan Phillips’ idea about rolling out a low-cal fruit sorbet a good idea? Would it be better to use the Häagen-Dazs brand name or a different brand name? What else, if anything, would need to be different about the strategy? Why?
– Premium quality ice-cream, sorbet, frozen yogurt and bars – Premium packaging designs
– Premium Pricing
– Different prices in different countries, but still considered expensive everywhere
– Its own ice cream stores all over the world
– Served in high end restaurants to impress customers
– Also available in convenience stores along with other bargain brands
– Offer special coupon prices once in a while
– Special discounts temporarily
– TV & newspaper advertisements
Strengths : – use natural ingredients
– international brand recognition – well adapted to diverse cultures and tastes – one of the top brands in the premium ice-cream market
Weaknesses : – offer fewer flavors than major competitors – contain high calorific content
– target segment relatively small
Opportunities : – increasing its target market
Threats : – increasing cost of ingredients
– consumers becoming more health-conscious – competition from other premium ice-cream producers
Position in the Ansoff Matrix
Product development : focused on new products in the existing market.
Haagen-Dazs has been successful for over half of the century. What are the sources for these successes is always challenging marketers of Haagen-Dazs itself and the competitors as well. Preparing good marketing strategies is always the policy craved deeply into marketers teams. Having an overview of the current market situation of ice cream industry and Haagen-Dazs profile will provide some new insights for the future development of the company. Along with that, market segmentation, target, and positioning determined by Haagen-Dazs are worth dwelling deeply into. Before getting any further steps, considering carefully the external and internal factors that influence the operating of Haagen-Dazs is necessary in coming up with impressive tactics.
Succeed or failure in creating values for customers in order to capture back values in return depends mostly on the marketing mix that Haagen-Dazs employing into its strategies. Product, price, place, and promotion strategies are all helping Haagen-Dazs differentiating with other competitors. Maintaining the uniqueness of its business is directly relating to the survival of Haagen-Dazs in a competitively strained market. Thus, looking into its weaknesses and threats to find out new ways of doing things.