Evaluate what is happening in the ice-cream market, especially regarding the apparent leveling off of super premium ice-cream sales and the possibilities for growth of the sorbet market. 2. Is Jan Phillips? idea about rolling out a low-cal fruit sorbet a good idea? 3. Would it be better to use the H?agen-Dazs brand name or a different brand name? What else, if anything, would nto be different about the strategy? Why?
Pillsbury?s H?agen-DazsJan Phillips is the newly hired ice cream product-market manager for North America for H?agen-Dazsthe world?s leading brand of super premium ice cream (now available in 55 countries) and the market leader in North America. Pillsbury says H?agen-Dazs (www.pillsbury.com/main/brands/haagen) 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 aggres- sive competition. Phillips is responsible for H?agen-Dazs? ice cream strategy planning for North America. Other product-market managers are responsible for Europe, Japan, and other global markets. Therefore, Phillips will be ex- pected to focus only on North America while knowing that everyone will be watching her (and North America) for clues about what may happen elsewhere. Overall, ice cream sales in North America have been off 1 to 2 percent in recent years. 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 barsin several flavourswere a big hit. Coldstone Creamery is a fast-growing franchise, increasing from 1 store in 1988 to about 1,000 now. H?agen-Dazs, along with a few other super premium producers, are continuing to grow at rates of 2 to 3 percent. But most other North American super premium pro- ducers are reporting flat sales, and some are going out of busi- ness. The easy availability of super premium ice cream in su- permarkets has hurt some of thproducers 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 the North America since the early 1990s is due to competition from other products such as lower-calorie yogourts and low-fat ice cream. Despite a real concern about healthy diets, North Ameri- cans 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 yogourt and low-fat ice cream. Thas encour- aged a number of super premium ice cream competitors to of- fer thproducts too. Pillsbury?s H?agen-Dazs, International Dairy Queen, and Baskin Robbins are selling frozen yogourt. And Kraftwhich makes Frusen Gl?dj?, Edy?s, and Dreyer?sGrand Ice Creamis among many other ice cream makers that are promoting gourmet versions of low-fat ice cream. Because of the competition from low-fat products, H?agen- Dazs introduced a line of low-fat super premium ice cream. The low-fat line contains no more than three grams of fat per serv- ing. That compawith six times more grams of fat in a half- cup serving of its full-fat versions. H?agen-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. H?agen-Dazs sells its low-fat products in a variety of flavours. Most ice cream products are considered economy and regu- lar brandspriced at $3 to $6 for 2 litres. Super premium ice cream retails for $3.50 to $4.50 a half-litre, or $9 to $11 for 2 litres. The retail price for a half-litre of H?agen-Dazs is usu- ally over $5.00. The low-fat version is comparably priced to the full-fat product. Many other North American ice cream producers have turned to frozen yogourt for growth. Frozen yogourt 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 yogourt tastes more like ice cream. The yogourt 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 North America, yo- gourt makers are using aggressive promotion against ice cream. TCBY ads have preached: Say goodbye to high caloriessay goodbye to ice cream and All the pleasure, none of the guilt. And the ads for its nonfat frozen yogourt emphasize: Say goodbye to fat and high calories with the great taste of TCBY Nonfat Frozen Yogurt. Baskin Robbins has introduced yogourt in many of its stoand has even changed its name to Baskin Robbins Ice Cream and Yogurt. H?agen-Dazs also offers yogourt in most of its stores. Although the flurry of consumer interest in low-fat yogourt and low-fat ice cream certainly created some new market op- portunities, it is not clear how consumers will react to thproducts over the longer term. One reason is that many con- sumers 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 H?agen-Dazs could pro- duce 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 sor- bets usually have an icy texture and include less milk. Tis 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. Fur-ther, 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 con- sumers crave and make a special trip to buy. Further, Phillips is very conscious that the H?agen-Dazs brand should stand for high quality and the best ingredients. Yet, it?s not clear that consumers will think of sorbet as a pre- mium 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 Ha- gen-Dazs counter the competition from other low-fat ice cream brands like Ben & Jerry?s and other new entries to the super premium category like Coldstone Creamery? 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 H?agen-Dazs brand name or a different brand name? What else, if anything, would nto be different about the strategy? Why?1. Evaluate what is happening in the ice-cream market, especially regarding the apparent leveling off of super premium ice-cream sales and the possibilities for growth of the sorbet market. 2. Is Jan Phillips? idea about rolling out a low-cal fruit sorbet a good idea? 3. Would it be better to use the H?agen-Dazs brand name or a different brand name? What else, if anything, would nto be different about the strategy? Why?
