ENTERING THE ICE CREAM BUSINESS:
A CASE STUDY OF KLEINPETER FARMS DAIRY
John James Cater III, Nicholls State University
Ken Chadwick, Nicholls State University
The primary subject matter of this case is strategic management for small business, specifically developing a new product and entering into a new competitive arena for an established small family business. Secondary issues examined include marketing strategy, human resource management, and operations management in the small family business. The case is appropriate for junior and senior level undergraduate courses. The case is designed to be taught in one class hour and is expected to require approximately three hours of outside preparation by students. The events described in this case are based on real world experiences.
Jeff Kleinpeter, fourth generation CEO of Kleinpeter Farms Dairy, has boldly led his family’s business into a new product/market area, specifically the production and distribution of ice cream. For nearly one hundred years, Kleinpeter Farms Dairy has served the south Louisiana area as the leading milk processor and distributor, but now the company has invested millions of dollars in a new, but related product. Jeff seeks to build on the loyalty and goodwill generated among consumers because of Kleinpeter’s excellent reputation for high quality milk products in the south Louisiana area. Kleinpeter appeals to local customers through cross-branding other Louisiana products, such as Ponchatoula strawberries, Bergeron pecans, and Elmer’s Gold Brick Eggs. After the new product is launched, the company experiences challenges in marketing, operations, and human resource management.
Key words: small business strategy, new product development, marketing strategy, family business
Journal of the International Academy for Case Studies, Volume 16, Special Issue, Number 1, 2010
Stepping into a quiet corner down the hallway from the buzzing noise of the auction, Jeff Kleinpeter smiled as he spoke into his cell phone, “Sue Anne, we are in the ice cream business. “There is no turning back now. We just spent $58,000 on one piece of equipment.” “Jeff you know that I trust your judgment, but this is a bit over the top, don’t you think? Are you sure about this?” Sue Anne questioned in reply as any CFO worth their salt would do. “I know that this is going to be a huge investment for us. We discussed this at length with dad before flying out here to Dallas. Joe May, our ice cream plant consultant, is here with us and he assures me that this is a great deal for us,” answered Jeff. “From the time I received a notice in the mail that a huge ice cream company here was closing down; I thought that this might be our chance to buy ice cream making equipment at bargain basement prices.” “Why did they close down?” asked Sue Anne.
“They said their biggest account had pulled out overnight. It was 60 percent of their business. That was it – they had to shut down,” Jeff replied. “I am glad that Joe is there for the technical advice. We know about milk and the dairy business, but ice cream is new for us. You are sure about this now, Jeff?” asked Sue Anne again. “In the auction, we bid the $58,000 on the ice cream freezer itself – the thing that pumps the air in and has the blades that turn to make the ice cream. It has three barrels and makes 1200 gallons of ice cream per hour. Additionally, we bought six fine pieces of equipment for about 10 cents on the dollar. It is beautiful, brand new equipment – state of the art. Don’t worry; Joe is advising us on the technical aspects of fillers and shrink-wrappers.”
GROWING THE COMPANY: THE NEED FOR ICE CREAM
With the purchase of the ice cream equipment in Dallas, Jeff had started the family business on a great adventure, maybe the biggest risk taken in 95 years at Kleinpeter Farms Dairy. The idea was not new with Jeff. For years, the Kleinpeters had thought about and...