Marketing and Ice Cream Producers free essay sample

In 2002, it ranked as the top ice cream producer which offered 170 different ice cream products and had more than $25 million in sales. In addition, Ice-Fili’s flagship ice cream brand â€Å"Lakomka† was responsible for 30% of the company’s sales. However, Ice-Fili has been losing its market share and experiencing a decrease in sales volume in recent years due to the increasingly competitive Russian ice cream market. External Analysis Life Cycle Stage The Russian ice cream industry was in the growth stage after 1996, the ice cream consumption value had a huge increase from 222,000 tons in 1996 to around 376,000 tons in 2002. However, the industry reached the shakeout stage in 2002 since the demand for ice cream approached saturation level and the competition between companies became more intense (300 companies in 2002). PEST Analysis The table below shows how the macro-environmental factors influence the ice cream industry in Russia. Political| GOST: a minimum standard determining the ingredients and quality, which protected traditional Russian ice cream producers| | The Dissolution of the Soviet Union: state-run economy transferred to an open-market economy, which lowered entry barriers and lead to higher competition| Economic| Open Market: created an opportunity for foreign producers to expand their ice cream brands in Russia| | Financial Crisis of 1998: hindered some potential entry candidates and adversely affected existing firms | Social| Increased Popularity of Bulk Ice Cream: enabled ice cream producers to capture the home consumption segment| | Increased Consumption of Substitute Products: as alcohol and soda products become popular among young people, the ice cream industry faced the challenge of decreasing sales| Technological| Rapid Development of the Ice Cream Equipment: an opportunity for ice cream producers to efficiently produce and maintain high quality products| Porter’s 5 Forces Bargaining Power of Suppliers * For suppliers of ingredients: low concentration and low switching costs * For suppliers of equipment: high concentration and high switching costs Bargaining Power of Suppliers For suppliers of ingredients: low concentration and low switching costs As mentioned in the SWOT analysis, one of the company’s weaknesses is poor brand recognition and low customer loyalty. We will write a custom essay sample on Marketing and Ice Cream Producers or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page However, brand awareness and loyalty is considered as a success factor of Russian ice cream industry. Thus, one strategy Ice-Fili should consider is focusing on marketing its brand. By introducing products through great advertisements and extensive marketing campaigns, more people will be attracted and want to try the products. If the company can do well in marketing, it can increase its brand awareness and also create larger market for the ice cream industry as a whole. Nevertheless, advertising and marketing costs would increase by 5% of total sales in 2003 as opposed to less than 2% in 2001. In sum, the gains in sales and brand awareness can outweigh the costs spent on the implementation of this strategy. Alternative 3: Distribution Network Expansion Another success factor mentioned in external analysis is extensive distribution network. A strong distribution network can lead to wider products availability. Although Ice-Fili offers a variety of products, its distribution network is weak. Therefore, Ice-Fili needs to increase its presence in gastronomes, mini marts, and restaurants. By expanding the distribution channel, Ice-Fili can increase its market share and tap a broader market. However, there are some constraints need to be considered, such as budget constraints, firm’s production capacity, limitation on transportation carriers, etc. Recommendation In consideration of the potential costs and benefits, we recommend Ice-Fili focus on marketing its brands first. Ice-Fili could invest in commercials or marketing campaigns on television with the company’s logo and slogan, put up posters especially during peak months, and give promotion (prizes, coupons for students). With additional revenues gained by marketing activities, Ice-Fili could then develop the distribution network and produce more of other products to capture new market segments.