“Ben And Jerry’s”
Given Ben & Jerry’s track record in entering foreign markets, does it make good strategic sense for Ben & Jerry to commit to entering the super-premium ice cream market in Japan? Why or why not? What prior “mistakes” will it need to avoid?
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Ben & Jerry’s had been traditionally slow to enter into the foreign market they have lost market share to both Haagen-Dazs and other ice cream suppliers. Ben & Jerry’s had begun to inquire about the Japanese market in the mid-1990s. Japan represents the second-largest ice cream market in the world, with annual sales of about $4.5 Billion, but there are high barriers to entry. Ben & Jerry’s would be a late entrant, more than 10 years behind Haagen-Dazs initial entry, and there are at least 6 Japanese ice cream manufactures selling super-premium products. Ben Cohen, one of the founders of Ben & Jerry’s, was opposed to growth, so the company had limited adventures overseas therefore had limited opportunities. Haagen-Dazs had no hesitation and by 1997 it was in 28 countries with 850 dipping shops around the world. Haagen-Dazs non-U.S. sales were about $700 million, compared to Ben & Jerry’s sales of $6 million.
Haagen-Dazs had completely taken over the international market by entering when the barriers to entry were low and now they are high. It makes sense for Ben & Jerry’s to enter the market in order to gain whatever market share that is possible, but since barriers to entry are so high they have to find a way to enter the market and get recognized whether it is through Seven-Eleven or by using Mr. Yamada. Entering is also a great idea if they proceed with the Seven-Eleven marketing plan.
This plan allows Ben & Jerry’s to enter into 7,000 Seven-Eleven store shelve, but still competing with other brands. Also Ben & Jerry’s would not have to promote its super-premium ice cream is since it is already part of the ice cream market(for example Haagen-Dazs) and Japanese people are aware of it. A plus for this is that convenience stores appeared to account for about 40% of super-premium ice cream sales in Japan, and Seven-Eleven was Japan’s largest chain.
What resource strengths/ competitive assets do Ben & Jerry’s have to support entry into Japan? What resources weaknesses/ competitive liabilities does Ben & Jerry’s have in trying to successfully enter the Japanese Market?
Several factors resulted in the reluctance of action by Ben & Jerry’s in entering the Japanese market. The company was unsure on whether the company had any business in Japan. They had trouble finding a lead option for an entry, and Ben & Jerry’s was struggling with so many changes in the CEO office, and also having no strategic planning. Ben & Jerry’s got an offer from Ken Yamada, a Japanese-American entrepreneur who offered to oversee marketing and distribution of Ben & Jerry’s products in Japan. He proposed to take charge of all the Japanese market in exchange for a royalty on all Ben & Jerry’s products sold in that market.
In 1997 Seven-Eleven joined Yamada as a leading contender for the interest in the Japan strategy. Perry Odak was the new president for Ben & Jerry’s and met with Mr Iida, the president of Seven-Eleven Japan. Seven-Eleven Japan is the parent company of Seven-Eleven U.S. Seven-Eleven’s more than 7,000 stores represented a major market regardless of all the possible outlets in Japan.
One of the problems is if the product were introduced to the Japanese market through the Seven-Eleven convenience stores it would be just one of the many brands there. Ben & Jerry’s might not be able to build its brand equity in Japan such as Haagen-Dazs had. Without brand equity, it could be difficult to distribute the product beyond the Seven-Eleven chain. Also, there is always the possibility that Seven-Eleven could cut off Ben & Jerry’s at some future date if it doesn’t sell effectively.
Is the market for super-premium ice cream in Japan a competitive attractive market from Ben & Jerry’s perspective? Why or why not?
Japan is the second-largest ice cream market in the world making it very attractive from Ben & Jerry’s perspective. Some of the challenges that Ben & Jerry’s will face are the high barriers of entry for foreign products and dealing with the immense distance for shipping the products overseas.
Despite these challenges, there are several compelling features: for starters, Japan is the most affluent country in the world and the Japanese consumers were known for demanding high-quality products with great varieties of style and flavours (which defines Ben & Jerry’s), incomes have steadily increased in Japan so animal-based food products and home refrigerators were affordable to a large number of people, also the dietary shift toward animal products was still underway leaving the door to the future open with commercial dairy sales starting to take off. In addition, the fact that the market in Japan welcomed ice cream with falling tariffs suggests new opportunities for imports abroad, not to mention the attractive prices that Ben & Jerry’s could get of around six dollars a pint.
Is Haagen-Dazs’s strong presence in Japan a plus or minus from Ben & Jerry’s perspective?
Haagen-Dazs is a very good product doing extremely well over in Japan. Ben & Jerry’s could learn a lot from their operations. Ben & Jerry’s could learn what types of flavours are doing well and what kinds of marketing strategies they used to promote their products.
Most importantly they could learn from their mistakes! It won’t be easy for Ben & Jerry’s to penetrate the market with already six Japanese super-premium ice cream products as well as Haagen-Dazs capturing 50% of the market. With ten years behind them and customer loyalty, it will be challenging for Ben & Jerry’s to compete with Haagen-Dazs. The potential for price competition is high.
What risks do you see to Ben & Jerry’s social mission? Can any problem with the present social mission not be resolved?
Retailer’s demands for JIT delivery would make it tough for Ben & Jerry’s. These demands would require Ben & Jerry’s to carry large inventories to meet the retailer’s expectations. One downfall would be that retailers had the power to drop flavours that did not meet sales expectations. The combination of JIT and the rejected flavours could be costly on top of the already high distribution costs related to the multilayered distribution systems in Japan. With multilayered distribution systems, the risk for potential ruined products is high from all of the moving around which would have to be figured in on top of the high shipping costs.
Is entering Japan consistent with Ben & Jerry’s asocial mission? Can any problem with the present social mission not be resolved?
Ben & Jerry’s Company had a social mission in the United States which was well known. Ben & Jerry’s would hold it’s stockholder meetings as outdoor festivals where standard attire included cutoffs and tie-dyed T-shirts. Cohen was liable to call the meeting to order in song. Ben & Jerry were determined that in addition to being fun to work for, the company would be socially responsible, known for it’s “caring capitalism.”
Ben & Jerry’s give 7.5 per cent of pre-tax profits to social causes like Healing Our Mother Earth, which protected community members from local health risks, and the centre for Better Living. Another example would be how the company certain flavours of there nut ice cream; such as “Rain Forest Crunch,“ the nuts would be sourced from tribal cooperatives in South American rain forests where nut harvesting would offer a renewable alternative to strip-cutting the land for wood products, and where the co-op members would, hopefully, get an uncommonly large share of the proceeds.
“Cohen wanted to enter the Japan market, but couldn’t see how entering the market would fit in with the company’s social mission. Others on the board shared his attitude. Two immediate problems were that entering Japan would not be the result of any social mission (the concepts of social mission and corporate charity being very foreign in Japan), and the company’s lack of international success suggested that it may already have been spread too thin in too many countries“ (Strickland, etc. p. c-393).
As a group we believe that any problem within its present social mission would be able to be resolved. Such as collecting research that helps the company find where the problem started. Then learn how to stop that problem from occurring again. This would help Ben & Jerry’s from losing profits. For example, the anti-corporate environment that Ben and Jerry’s put out for their employees’ might give them a little too much freedom for the people that work for them.
This may cause serious problems for the company. Many employees’ might not take the work that they do serious and may cause a loss in profits. The super-premium ice cream market competitors in Japan is not known for an anti-corporate environment that’s why they are at the top of the market. With a little better help from others, the change could be made to help overcome this issue; and make Ben & Jerry’s number one on the list for super-premium ice cream in the market.
Should Ben & Jerry’s commit to entering the ice cream market in Japan? If it commits to go forward should it do so with Mr Yamada or with 7-eleven? What are the pros and cons of partnering with Mr Yamada? What are the pros and cons of partnering with 7-eleven Japan?
Ben & Jerry’s should commit to entering the ice cream market in Japan. Several factors resulted in Ben & Jerry’s entering the Japan market. In entering, Ben & Jerry’s will gain some distribution through the Japanese market. Ben & Jerry’s needs to enter the market in order to gain and take over shares that other competitors currently have, and get recognized, whether it is through Seven-Eleven or by using Mr Yamada. Entering through Seven-Eleven marketing plan will give the company the advantages.
This plan allows Ben & Jerry’s to enter into 7,000 Seven-Eleven store shelve, but still competing with other brands. Advantage of its size and its state-of-art logistics systems by buying the product directly from suppliers, avoiding the several layers of middlemen that stood between most suppliers and Japanese retailers. These cost savings could make the product more affordable and/or allow a wider margin to protect against such risks as currency fluctuation. Also, the convenience stores appeared to account for about 40% of super-premium ice cream sales in Japan, and Seven-Eleven was Japan’s largest chain.
Several problems is if the product were introduced to the Japanese market through the Seven-Eleven convenience stores it would be just one of the many brands there. Ben & Jerry’s might not be able to build it’s brand equity in Japan such as Haagen-Dazs had. With out brand equity it could be difficult to distribute the product beyond the Seven-Eleven chain. Also, there is always the possibility that Seven-Eleven could cut off Ben & Jerry’s at some future date if it doesn’t sell effectively.
Another offer to enter the Japan market with Ben & Jerry’s would be Ken Yamada, a Japanese- American entrepreneur who offered to oversee marketing and distribution of Ben & Jerry’s products in Japan. He proposed to take charge of all the Japanese market in exchange for a royalty on all Ben & Jerry’s products sold in that market. In 1997 Seven-Eleven joined Yamada as a leading contender for the interest in the Japan strategy.
Even though there were positive factors entering the Japan market with Yamada there were several problems also. Yamada lack’s in enthusiastic support of the board of directors for a possible entry into Japan. Yamada would retain the rights to change and marketing developing. This would also cause Ben & Jerry’s to have no say on what flavors could be allowed in Yamada chains.
Ben & Jerry’s Recent Information
Ben and Jerry’s was recently bought by Unilever, a British-Dutch consumer-goods conglomerate with $43.7 billion in annual sales in products. “Unilever repeated promises that Ben & Jerry’s would continue as an independent entity, devoting 7.5 per cent of pretax profits to a charitable foundation.” According to founder Ben Cohen who made about $ 39 million with the sale of his stock to Unilever, The best and highest use for Ben & Jerry’s is to try to influence what goes on at Unilever.
The sale to Unilever has been somewhat controversial between some Ben and Jerry’s supporters who believe that the ethic of Ben and Jerry’s ice cream will be lost when a multinational corporation absorbs them.
The $326 million deal would bring the maker of ice cream flavours like Chunky Monkey and Cherry Garcia under the same corporate umbrella as Good Humor and Breyers ice cream. They feel that Ben & Jerry’s has a significant opportunity outside of the United States. Unilever is in an ideal position to bring the Ben & Jerry’s brand, values and socially conscious message to consumers worldwide.