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Situation Analysis Ben & Jerrys

HistoryIn 1978 after a $5 correspondence ice cream-making course, Ben Cohen and

Jerry Greenfield opened up their first ice cream shop in Burlington, Vermont out of a renovated gas station. In 1980 Ben and Jerry began distributing their ice cream in pints to local stores. In 1984 a Vermont-only public stock was offered in order to raise money for a new manufacturing plant. In August of 2000, Ben & Jerry’s became a wholly owned subsidiary of Unilever. The Board of Directors approved Unilever’s offer of 43.60 per share for the 8.4 million outstanding shares, which values the total transaction at $326 million (Ben & Jerry’s, 2016). The company website has an “Our Values” page where it states, “Ben & Jerry’s operates on a three-part mission that aims to create linked prosperity for everyone that’s connected to our business: suppliers, employers, farmers, franchisees, customers, and neighbors alike.” The three parts of Ben & Jerry’s mission aligns with the three factors of The Triple Bottom Line. They have a product mission to promote business practices to respect the environment, an economic mission to operate on a financial basis of profit growth to increase value for their stockholders, and a social mission to improve the quality of life on a local, national, and international scale. Examples of some of the achievements the company has completed to reflect these missions are; becoming fully Fairtrade ingredient-certified, using non-GMO ingredients, and by starting a carbon reduction program in 2014. Also, the company has a foundation, Ben & Jerry’s foundation, which has interests in furthering social justice, protecting the environment, and supporting sustainable food systems. They do so by engaging their employees in philanthropy to enhance communities and organize for social and environmental justice.

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Brand and IndustryBen & Jerry’s is a super-premium ice cream product. In order to be a super-

premium ice cream, air pushed into the ice cream must be less than 50%. As well, the ice cream must contain at least 14% butterfat (Chocolate Shoppe Ice Cream, 2016). Ben & Jerry’s is well known for carefully choosing their ingredients promising non-GMO and being the first ice cream company to use Fairtrade-certified ingredients. Not only does Ben & Jerry’s focus on making ice cream, but they have a strong commitment towards environmental responsibility and social activism. Ben & Jerry’s, “Positions itself as unconventional and quirky, with its fun flavor names, and it has strong sustainability credentials” (Unilever, 2016). Ben & Jerry’s is the world’s fourth top selling ice-cream brand. Since its acquisition by Unilever in Since 2000, when the company joined Unilever, the brand has been growing at a constant rate while maintaining their unique and quirky brand image. The sales have almost tripled within the last 15 years and from 2015 to 2016 their sales grew 14% bringing Ben & Jerry’s sales to $1.23 billion as of 2016 (Yehong 2016). Within the United States, Ben & Jerry’s has 9% of the premium ice cream market share. Ben & Jerry’s has the competitive advantage over their competitors because of their uniqueness of flavors and quality of their product. Also, the way that Ben & Jerry’s supports only Non GMO and Fairtrade, this gives an advantage to ensure the dollar the consumer is paying is worth it compared to the competitor.

Competitive AnalysisPrivate Labels, Häagen-Dazs, Edy’s, Blue Bunny, and Breyers all share the most

market share for premium ice cream with Ben & Jerry’s within the United States. As you can see in Figure 1.1, Private Labels account for a whopping 45% of the market share (Statista, 2016). Private label ice cream products include Walmart’s Great Value ice cream and Target’s Market Pantry ice cream. Both Private Label examples provide a variety of flavors at fair quality for a smaller price in order to compete with the rest of the market. Nestlé owns 21.6% of the total market share of the US ice cream industry, with Häagen-Dazs and Edy’s both being the key players for this percentage. Edy’s has been producing premium ice cream since 1928 while Häagen-Dazs has been since1961. Blue Bunny, operated by Wells Enterprise Inc., has 5.5% of the market share and began in 1935. Breyers, having 9.7% of the market share, is another Unilever brand which creates some cannibalization for Ben & Jerry’s.

Figure 1.1

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Competitor company Since 1961, Häagen Dazs has been producing super premium ice cream. A

Polish immigrant by the name of Reuben Mattus wanted to ‘change the world of ice cream’. While Ben & Jerry’s may be thought of as spunky and creative, Häagen Dazs prides itself to be seen as the sophisticated and classy brand. These two premium ice cream brands have had a history of competition, including lawsuits and legal battles against each other. For example, starting January 1st, 1998, Haagen-Dazs implemented a loyalty program which meant that distributors could only carry Haagen-Dazs pints and no other competing lines, such as Ben & Jerry’s (Goldsmith, 1987). Häagen-Dazs was acquired by Pillsbury from 1983-2001, then Nestlé from 2001-current. The original product line of Häagen Dazs included just ice cream of three flavors: vanilla, chocolate, and coffee. Since then company has not only enlarged their ice cream product line by more thirty flavors, but also expanded past just premium ice cream to a product mix of gelato, ice cream bars, frozen yogurt, and sorbet. (Häagen Dazs, 2016)

SWOT Analysis and Environmental ScanThere are many indicators in the external environment that may affect the future

of a company. Significant legal influences include the U.S. Food and Drug Administration (FDA), who regulate the safety of substances added to foods. They also regulate how much food is processed, packaged and labeled. In June of 2012, Unilever recalled pint containers of Ben & Jerry’s Chocolate Nougat Crunch ice cream because they were missing the allergen advisory statement. The FDA requires the allergen advisory statement at the end of the ingredients list but was omit from the recalled product (FDA, 2012).

The most relevant technological influences for Ben & Jerry’s include e-commerce grocery shopping, which is a strong opportunity for Ben & Jerry’s since they offer their product already on range of online grocery shopping sites and directly from their site for mail order. According to a recent study in April of 2015, ¼ of global respondents say they already use online grocery shopping and over ½ respondents say they are willing to in the future (Nielsen, 2015). This is a growing market for grocery products and specifically Ben & Jerry’s since this will allow access to all of their flavors, rather than the handful that a given retailer provides.

The economic environment has an impact on the market’s growth rate for ice cream that could either lead to an opportunity or a threat. When the economy is not doing well and people are unemployed, the market for ice cream decreases because it is not a necessity for standard living. When the economy is doing well and people are comfortable spending, consumers are more likely to purchase this product. Inflation rate also affects the purchasing of ice cream. When price inflation occurs, people are able to purchase fewer goods because the price goes up. It is good to have inflation in moderation but when it is too high it is considered bad. Also in terms to the economic environment, Ben & Jerry’s believes minimum wage should be a livable wage and

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provide the ability for a reasonable quality of life, therefore adjusts their company’s minimum wage annually relative to today’s marketplace. Ben & Jerry’s current minimum wage is $16.92/hr ($35,193/yr) part and full time. At year end of 2015, Vermont’s minimum wage was $9.15/hr ($19,032/yr) and that national minimum wage was $7.25 ($15,080/yr) (Ben & Jerry’s SEAR, 2015).

SWOT Analysis Strengths

Well established brand name

Philanthropic Creative flavors Quality Fair Trade

Weaknesses Voice for controversial

issues More expensive Low market share in US

Opportunities Healthier frozen dessert

options Find equilibrium in

business and social topics Lower price to better

compete with competitors

Threats Competitors Evolving concern to have

healthy diet Increased cost of milk

Strengths1. Ben & Jerry’s is a well-established brand known for their quality products and

environmentally friendly business practices. Ben & Jerry’s does a great job using their strong and recognizable brand name to their advantage.

2. Philanthropy is a major part of this company as each year they give a portion of their profit to charitable causes. In 2014, over 2.5 million dollars were distributed in forms of grants.

3. The many creative and unique flavors allow Ben & Jerry’s to target many different consumers with different tastes

4. The quality of ingredients is important because it provides an overall better product and taste, which creates more demand.

5. Fair Trade supports fair wages for workers providing out sourcing ingredients Weaknesses

1. Ben & Jerry’s vocal stand point can be considered a weakness because consumers with opposing views will choose a different product

2. Although Ben & Jerry’s has many creative flavors and high quality products, their prices tend to be more expensive than their competitors, which can be considered a product weakness

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3. The current ice cream market in the US is very competitive and Ben & Jerry’s current market share is only reaching 9%

Opportunities1. Providing consumers with a healthier frozen dessert options can give Ben &

Jerry’s the opportunity to gain more of the market share2. Finding equilibrium in business and social topics could be a huge opportunity so

that the company can still promote things they are passionate about without turning away consumers

3. Lowering prices on products to better compete with competitors is a great way to gain more of the market

Threats1. The ice cream industry is very competitive and Ben & Jerry’s currently has many

different competitors2. The evolving concern to have healthy diet is detrimental to Ben & Jerry’s as a

fattening and unhealthy product3. Increasing costs of milk poses great threat to Ben & Jerry’s and could result in

them having to increase their prices even more

Target MarketThe consumer demographic profile for Ben & Jerry’s is provided by InfoScout,

America’s strongest source of consumer purchase data. Analyzing the graph below (Figure 1.2), we see that race and income do not have too large of an impact on purchasing this product. Contrary to, having any type of college degree to no degree outweighs each other roughly 75% to 25%. Also, out of 597 respondents, roughly 44% of consumers were 34 years of age or younger.

Another factor to take into account for target market is regarding political stance. As stated earlier, Ben & Jerry’s brand is used to vocalize ‘far left’ ideologies. Aside from their political protests, they launch flavors such as, ‘I Dough,

Figure 1.2

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I Dough’ in support of marriage equality and ‘Empower Mint’ for the reauthorization of the Voting Rights Act. Figure 1.3 below shows that the North West and North East are both selling Ben & Jerry’s well above average margin (at 100). This reiterates the element that liberals or democrats are more likely to purchase Ben & Jerry’s, because the Figure 1.4 shows the most democratic states being in the popular selling points for the product.

Figure 1.3

Figure 1.4

74.84%

107.52%

76.34%

95.49%

138.08%

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It is found that Ben & Jerry’s consumers have high loyalty given that if the place of purchase was out of the product, 62% of consumers would either go to another store or waited until their next trip to the store in order for the specific product (Figure 1.5). Also, the buyer behavior (Figure 1.6) shows that Ben & Jerry’s is typically bought during a stocking grocery store trip (21 or more items). Out of 530 respondents, over 50% purchase Ben & Jerry’s while out buying numerous other products.

Figure 1.5

Figure 1.6

Product AnalysisThe Ben & Jerry’s brand is more than just a name for their ice cream product, in

Ben Cohen and Jerry Greenfield’s book, “Double Dip,” Ben states: “Modern marketing is a process whereby faceless, nameless, valueless corporations hire marketers to determine what the consumer would like their brand to be, and then fabricate an image that corresponds. But they still only get a sliver of the market, because their made-up story isn’t any more appealing than the next. With values-led marketing you just go out there and say who you are. You don’t have to fool people to sell them your product.”

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This is a strong exemplifier as to the kind of brand Ben & Jerry’s is. Their brand identifies the creator’s personalities and thus portrays an innovative, fun, and ethically motivated brand name. The brand’s development began right away in 1978 when the ice cream shop opened out of a renovated gas station. A year later to celebrate the one-year anniversary, free cone day was introduced, free scoops for all. Only seven years after the opening, The Ben & Jerry’s Foundation was established for 7.5% of annual pre-tax profits to fund community oriented profits. These three beginning milestones exemplify the innovative, fun, and ethically brand that has continuously expanded (Ben & Jerry’s, 2016).

Ben & Jerry’s uses a family branding strategy for its ice cream, sorbet, frozen yogurt, and ice cream bars. Benefits to the Ben & Jerry’s brand is that a percentage of proceeds go to charity, supporting fair trade workers, quality, and their involvement in social and environmental issues. Brand strengths is the awareness of the brand and the quality it represents. Brand weaknesses include overtly supporting controversial topics whether it be mandatory GMO labeling, LGBT rights, or the Black Lives Matter movement. While all of these topics may be seen as beneficial, any consumer within their demographic against any of their latest public protests or ideologies would choose another brand of ice cream.

Distribution AnalysisLocal Vermont farms sell their milk to St. Albans Cooperative Creamery produce

it into heavy whipping cream and condensed milk, from there it is taken in tanker trucks to the two factories. Once the trucks arrive, there are pumped into storage silos were they are kept at preserving temperature until ready moved to a 1000 galloon blender where the other needed ingredients are added. Next, the mixture is pasteurized and homogenized then stored until the final ingredients can be added in. Once completed, a machine dispenses the finished ice cream product into pints at 120 pints a minute. The pints of ice cream must then be frozen to harden for three hours at 60 degrees below zero. After they are frozen solid, a machine bundles 8 pints at a time in a plastic sleeve to be then be stacked on top of each other on shipping pallets to prepare for the 20 degrees below zero warehouse to await shipment.

Ben and Jerry’s ended their exclusive distribution relationship with Dreyer’s in 1998, while simultaneously establishing a network where no Ben & Jerry’s distributer will have more than 40% of the brands distribution power (Wall Street Journal, 1998). Ben & Jerry's now intensively distributes through wholesalers and retailers nationwide and worldwide to supermarkets, grocery and convenience stores, restaurants and cinemas. They also provide mail order delivery through various retailers such as: amazon fresh, fresh direct, IceCreamSource.com, Instacart, Peapod, postmates, and Safeway. (Ben & Jerry’s, 2016) Ben & Jerry’s currently operates two manufacturing and distribution centers in St. Albans and Waterbury, Vermont, as well as a Unilever facility in Henderson, Nevada. On a global scale, they have Unilever facilities in The

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Netherlands. From these manufacturing facilities is where ice cream gets shipped from to all over the world.

Manufacturing Facilities

Wholesales/Retailers/Mail order

Consumers

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Promotional AnalysisIn the beginning years, Ben & Jerry’s advertising tactic was viral marketing, or by

word of mouth. Slowly the renovated gas station ice cream shop began generating lines out the door. Ben and Jerry began a tradition of showing movies once a week in the summertime outside of their shop, which became an awaited community event each week. Fast forward a few years and the community movie event became multiple community projects, such as sponsoring festivals, concerts, fairs, along with a booming business. In today’s world of technology and social media, Ben & Jerry’s of course joined the bandwagon, with over 8 million likes on Facebook and almost 700,000 Instagram followers, the company uses these social outlooks to post new flavors, recipes, engaging topics, and just overall photos or videos of the ice cream being enjoyed. Figure 1.7 shows a screenshot of the company’s latest Instagram feed. Ben & Jerry’s social media usage for promotion is perfect for their young target market and allows them to communicate with their consumers. The articles, photos, and videos get shared from their consumers which then catch other potential customer’s attention. This way of advertising goes hand and hand with the direct marketing available to customers because of the option to mail order their ice cream right off their website to the convenience of the customer’s home. Another great tactic the company uses is making flavors for The Tonight Show, host, Jimmy Fallon. Both flavors, The Tonight Dough and Late Night Snack, allow the creators Ben and Jerry to come on the show, with millions of viewers, to present the flavors. The public relations aspect of the company booms because of their outspoken company goals and objectives, which are geared towards humanitarian issues. In regards to sales promotions, Ben & Jerry’s occasionally will offer coupons on their Facebook wall, which offers free ice cream if you engage with them on their Twitter page, see figure 1.8.

Figure 1.7

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Figure 1.8• Price Analysis

Ben & Jerry’s is more expensive than most competitors including Häagen Dazs, but Ben & Jerry’s uses a prestige pricing approach, which may inflict the hedonistic effect. By charging a higher price, consumers know they are getting a better quality product and may create feelings of pleasure which is associated with consuming higher priced products. The table below shows Ben & Jerry’s and Häagen Dazs, both primarily sold at a pint size or 14 ounces and a price per unit analysis.

Ben & Jerry’s Häagen Dazs14 oz 4.50 3.50

Price per unit .32 an oz .25 an ozFigure 1.9

Comparison

Ben & Jerry’s Häagen DazsProduct Premium Ice Cream Premium Ice Cream

Place (Distribution) 35 countries worldwide 50 countries worldwidePrice .26 an oz .21 an oz

Promotion Facebook ads Facebook adsTarget Market Liberals, millennials Middle age and senior

citizens Figure 1.10

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International ramificationsInternationally, Ben & Jerry’s marketing mix does not have much of an overall

change. The product remains the same as the pint of premium ice cream. Ben & Jerry’s chooses to globally distribute only their most popular flavors such as Cookie Dough and Half Baked, for example. They have expanded from just locally distributing in Vermont to throughout the East Coast, to The United States, to worldwide. Promotional tactics remain primarily based off of their social media pages, which are accessible from all countries. The price fluctuates geographically due to economic factors, conversion rates, and shipping costs.

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Work Cited

Ben & Jerry's Ice Cream. (2016). Retrieved November 13, 2016, from: http://www.benjerry.com/

Super Premium Ice Cream. (n.d.). Retrieved November 15, 2016, from: http://chocolateshoppeicecream.com/SuperPremiumIceCream

Our Brands. (n.d.). Ben & Jerry's. Retrieved November 07, 2016, from: https://www.unileverusa.com/brands/our-brands/ben-and-jerrys.html

Zhu, Yehong. (2016, June). The World’s Top-Selling Ice Cream Brands. Forbes. Retrieved from November 14, 2016 from: http://www.forbes.com/sites/yehongzhu/

Market share leading ice cream brands U.S., 2016. Retrieved November 14, 2016, from: www.statista.com

Goldsmith, C. (1987, November 17). Ben & Jerry's sues Haagen-Dazs again. Retrieved November 15, 2016, from: http://www.upi.com/Archives/1987/11/17/

Häagen-Dazs Ice Cream - Häagen-Dazs. (n.d.). Retrieved November 15, 2016, from: https://www.haagendazs.us/

Unilever Issues Allergy Alert On Pints Of Ben & Jerry's. (n.d.). Retrieved November 20, 2016, from: http://www.fda.gov/Safety/Recalls/ucm307962.htm

More Than Half of Global Consumers Are Willing to Buy Groceries Online. (2015, April). Retrieved November 20, 2016, from: https://www.coursehero.com/file/p32qk6u/Secondary-Data-Nielsen-2015-April-29-More-Than-Half-of-Global-Consumers-Are/

2015 SEAR Report | Ben & Jerry’s. (n.d.). Retrieved November 19, 2016, from: http://www.benjerry.com/about-us/sear-reports/2015-sear-report

Ben & Jerry's Consumer Insights and Demographics | InfoScout.co. (n.d.). Retrieved November 15, 2016, from: http://infoscout.co/brand/ben_n_jerrys/

Ben & Jerry's Dumps Dreyer's As Its Exclusive Distributor. (1998, August 31). Retrieved November 15, 2016, from: http://www.wsj.com/articles/SB904583504828888000

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Work Cited Continued

Comfort, S. (2009, November 9). Lift Trucks Keep Ben & Jerry's Ice Cream Churning. Retrieved November 17, 2016, from: http://www.foodmanufacturing.com/article/2009/11/lift-trucks-keep-ben-jerrys-ice-cream-churning

Grande, A. (2008). Marketing Lessons from Ben and Jerry. Retrieved November 19, 2016, from: https://www.experience.com/alumnus/article?channel_id=advertising_marketing_pr&source_page=additional_articles&article_id=article_1175615363858

Map: The most Democratic and Republican states. (n.d.). Retrieved November 15, 2016, from: https://www.washingtonpost.com/blogs/govbeat/wp/2015/02/06/map-the-most-democratic-and-republican-states/

Yucel, Ibrahim. (2016, August). IBISWorld Industry Report 31152. Ice Cream Production in the US. Retrieved from IBISWorld database.

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