Ice Cream Production and Consumption - Case Study Example

1. INTRODUCTION This business plan proposes to open a new ice cream and cake retailing outlet - Snow White & 7 Deserts, (SW&D) in Halifax, Canada. The market for customized ice creams is growing, especially with the reduced quality of mass manufacturers who are changing their ingredients to cheaper substitutes. More and more customers choose homemade style ice creams which are made of fresh natural dairy products, instead of milk substitutes used by mass producers (Steinman (2008). SW&D has identified this shift in consumer preferences and aims to offer a range of customized ice creams, deserts and cakes. Halifax is an ideal location to open this venture, given the vibrant nature of the summer months. The long term vision for SW&D is to expand as an outlet chain across Canada and the Municipality of Halifax will offer the ideal expansion grounds initially. 2. OPPORTUNITY RATIONALE a. The consumers are increasingly looking for customized specialty ice creams with distinct, creamy natural ingredients. b. With the economy coming out of stagnation, people are willing to spend on small indulgences such as ice-creams and cakes. c. Norva Scotia region where Halifax is located is one of the most promising of Canadian tourism attractions with over 2 million visitors in recent years. Halifax tourism and own population are growing steadily (398,000 in year 2009), providing an expanding customer base. 3. THE INDUSTRY ANALYSIS 3.1 Market Overview Ice-cream industry in Canada has experienced slow yet steady growth, despite its non operational nature during winter months. The Canadian production of ice cream is 400 million liters of hard and approximately 20 million liters of soft ice creams (Sector Profile, 2006) Other items as sundaes and shakes account for 175 million liters. Out of this production Canada also exports around 15 thousand tones over the previous year, mainly to USA and Arab countries (Consumption of Dairy Products, 2010). Total ice cream sales in Canada reached almost $2.1 billion in sales value. The industry is not fragmented and two giants, Nestle and Unilever holds over 60% of the market share (Euromonitor, 2006). Rest of the market is fragmented with regional chains, vendor franchises and chart sales. 3.2 Market Trends Per capita per annum- approximately 9.7 liters (Ice Cream Production and Consumption Data, 2010). Family size containers accounting for 68% of the sales and dominate retail sales. Increasing demand for specialized ice cream retailing which couples product offers as cakes and deserts. Increasing trend towards impulse ice cream purchases gaining in popularity with 7% growth over years and now accounting for over 20% of overall market sales. Promising growth of 12-15% in frozen yoghurt driven by healthier eating choices. 3.3 Competition The market is heavily competed by the packed ice cream manufactures, mainly Nestles and Unilever. Other small scales operators account for the rest of the market share of around 50%. 3.3.1 Direct Competitors Direct competition for SW&D will come from the other ice cream parlors in the region such as Dairy Queen, Black Bear Ice Cream Parlor, Cows Homemade Ice Cream, Kendales Ice, Cows Halifax, Cold Stone Creamery to name a few. In addition to these well known outlets, there is a host of other outlets which capitalize on the growth of impulse purchases (Dairy market.com, 2008). 3.3.2 Indirect Competition Indirect competition to ice creams comes from other deserts and confectionaries that will compete for customers’ share of spend on impulse indulgent foods. However, in this business scenario, SW&D is planning to counter this by incorporating a wide desert line up in to its menu. Secondly, packed ice creams which are generally consumed at home also pose an indirect competition. This segment of the Canadian ice cream market accounts for over 68% of total sales (Sector Profile, 2006). 4. THE COMPANY AND PRODUCT DESCRIPTION 4.1 The Company The proposed company is an ice cream and deserts parlor to be located in Halifax – Canada. The proposed name for the business is Snow White and 7 Deserts. This desert parlor will offer Halifax consumers a chance to experience exotic European premium tastes, with specialized recipes that offer high quality specialty ice creams and deserts. The name gives a twist of fun to the concept of product line where, Snow White represents the ice creams and the 7 deserts represent the 7 dwarfs. 4.2 The Business Concept SW&D will operate as a place where people will go to experience deserts of excellence. It’s a place for creamy sugary decadence! The business concept is to offer sit-in style desert experience as well as to offer take home family packs. In addition to this, SW&D will undertake supply of deserts and ice creams to parties and functions as well as fundraiser events etc. The ice cream will be made in-house along with all the other desert items. The central kitchen including the ice cream making operation will be located at the same location as the ice cream parlor. 4.3 The Product Description SW&D’s product range consist of over 15 varieties of ice cream flavors in soft and hard form, made out of finest fresh dairy products sourced locally. The local fresh fruits as berries are used for most of the delectable recipes of the ice creams, smoothies, frozen yoghurts etc. Other deserts include a range of cakes, gateaux, caramels, parfaits, mousses etc. 4.4 Additional Business SW&D will also offer hot and cold beverages to customers, including coffee, tea, hot chocolate, smoothies and fruit juices. This becomes necessary for supporting and complementing the cake products and operations during winter months. 4.5 Competitive Advantages There are number of key advantages of the proposed business: The entrepreneur in context has trained in food and beverages in one of the top Swiss hotel schools and followed specialized culinary courses in frozen and cold deserts. This knowledge is expected to help SW&D gain an instant market footing at the launch stage and establish its brand presence in the market as a premium scale desert location which can be afforded by the normal consumers. The entrepreneur has an excellent location advantage at one of the most frequented of piers in Halifax. The space allows for the central kitchen concept to be incorporated. There are no ice cream parlors within 3 mile radius of the proposed location, except for the mobile Popsicle and tub ice cream vendors. 4.6 Entry and Growth Strategy The entry in to the market will be with this initial outlet and the management of SW&D plans to expand up to 25 outlets in different locations by 2015. Franchisee options will be considered within expansion efforts. The five year plan is rather conservative, yet justified by slow growth rates in Canadian ice cream market. 5. MARKETING PLAN 5.1 Overall Marketing Strategy SW&D will pursue a niche marketing strategy with its specialized ice creams and deserts, with a premium market positioning (Boyle, 2007). It is a place for family, friends and individuals to enjoy what they like. The premium image will be supported by the product quality, the names to be given, the choice of ambiance for the outlets, friendly service. 5.2 Target Customer profile SW&D’s main target segment will include families and couples in Halifax area as well as the tourist population travelling to Halifax. The demographics profile is wide and will include families, young adults and couples as well as children from families in middle and upper income strata. These clients would have disposition towards adventure, appreciation of premium quality food and giving in to life’s little luxuries. For them, SW&D will become an essential part of their daily life where a desert, a cake or a special treat is picked up on their way home, for after dinner, included in the child’s lunch box, or enjoyed at SW&D while being out and about. 5.3 Product Strategy SW&D will offer premium quality ice creams and deserts. Ice creams will be offered in cones and bowls for eating-in customers and packed on request in individual, medium and large packs to suit different family sizes when it comes to take away options. The cakes and other deserts will also be available in individual portion sizes or in whole form for as per customer need. These items will have the uniqueness of product, product names, taste, ingredients, design and packaging to live up to the exclusive image in the mind of the consumer. The core product will be augmented by service by friendly staff and rich ambiance of the outlet. 5.4 Pricing strategy SW&D products will be prices at a premium but maintained at prices which are at par with similar premium range ice creams and cakes. The affordability of the products will be kept in mind to attract the customers. Introductory pricing strategy will be to prompt trial of product and get customers accustomed to the location. 5.5 Distribution strategy The initial distribution of SW&D products would be from the main outlet. As the business expands, there can be other outlets from which the customers can be catered to. The vision is to have an SW&D present in every major shopping mall and other key locations. In addition, mobile trucks with the SW&D products will be available for promotions and events as well as for mobile selling in parks where customer seating will be arranged. 5.6 Advertising and Promotion The SW&D products aim to bring fun, premium quality and little indulgences to life. This brand massage will be included in all promotional strategies and tactics. Both top of line and below the line advertising options will be utilized at the launch stage (Armstrong & Kotler 2000). Initial outlet opening will be advertised in Halifax Radio stations. There will be direct mailer shots inserted to Halifax news papers, with discount coupons of up to 30% which can be redeemed during the 1st week of outlet opening. The introductory offers during the 1st month will offer cross promotional sampling for customers to create trial of a wider range of SW&D products. Free sampling operations will be carried out at sporting events etc, along with distribution of discount coupons. Snow white and 7 dwarfs will be a main attraction for the children to attend SW&D opening party. Snow White represents the ice creams while the 7 dwarfs will represent 7 decadent ranges of deserts such as 1) cakes, 2) caramels, 3) mousses, 4) parfaits, 5) smoothies, 6) sweet pies and tarts, & 7) fruity yoghurts and shakes. This same concept can be adopted in servicing birthday parties and other fun events which SW&D will carter to. Public relations activities should also be incorporated (Belch & Belch, 2004) where SW&D can sponsor local child welfare activities, and contribute a certain margin of profits from sales towards fun raising events it attend etc. A customer care hotline and a comment book should be in place for customer feedback which is critical for assessment and modification of the marketing strategies. An interactive website is to be developed for SW&D where club membership is to be promoted. A raffle draw to select 25 winners to receive free ice cream or free cake for their birthday may be an initial promotional offer to attract membership registrations. These members may be a closely targeted group for special promotions, new product emails campaigns etc. The members can be engaged to promote the company by introducing “bring in friends to SW&D and win” promotions. References Armstrong, G. & Kotler, P. (2000). Marketing: An Introduction, 5th ed, Person Education Inc, Singapore. Boyle, E. (2007) “A process model of brand cocreation: brand management and research implications” Journal of Product & Brand Management . Volume 16 Number 2 2007 pp. Sector Profile: (2006) Ice Cream, Agriculture and Agri Food Canada. Accessed 19.10.2010 http://www4.agr.gc.ca/resources/prod/doc/dairy/pdf/prof_icecream_e.pdf Global ice cream industry – strategic market, international trade & production review Report (2008) Dairy market.com. Accessed 20.10.2010 http://www.dairymark.com/pdf/icecream.pdf Belch, G. E. & Belch, M. A. (2004). Advertising & Promotion: An Integrated Marketing communication perspective, Irwin, Illinois. Canadas Dickie Dee Ice Cream products poised to expand presence in USA market (1991) http://www.thefreelibrary.com/Canadas+Dickie+Dee+Ice+Cream+products+poised+to+expand+presence+in...-a011189348 Consumption of Dairy Products. 2010 Canadian Dairy Information Centre (CDIC). Accessed 20.10.2010 http://www.dairyinfo.gc.ca/ Ice Cream Production and Consumption Data. (2010). Dairy Science and Technology Centre, University of Guelph. Accessed 20.10.2010 http://www.foodsci.uoguelph.ca/dairyedu/home.html   Jon Steinman (2008) Is Canadas "Ice Cream" Disappearing? Deconstructing Dinner Accessed 16.10.2010 http://www.kootenaycoopradio.com/deconstructingdinner/column_iscanadasicecreamdisappearing.htm Euromonitor, (2006). Ice Cream in Canada, February. Read More